@AriellaNumshun: Don't worry, a web site dedicated to shifting click income to shell companies based in other states should pop up in about ten seconds.

The arguments about unrealized capital gains are stupid. Our tax code *already* taxes realized capital gains, so the flat tax would work the same way. If you sell stock and you made a gain of $x, you'd pay 20% of $x. Obviously you don't have to pay taxes on unrealized gains.

The other major simplification would be to get rid of corporate income taxes. They are just "hidden" taxes on people (corporations just pass on the taxes in the form of higher prices and lower wages).

As has been pointed out repeatedly, all the 'flat tax' proposals are nonsense because they want to levy a tax on earned income, which affects people at the lower end of the wealth spectrum, while letting capital gains and the estate tax slide (gee, just so happening to benefit rich people more).

@frank64: Not to mention addictive.

2. Please don't use the 'small business victim' excuse. One spreadsheet and any bozo can instantly calculate, charge, and remit the appropriate tax to the appropriate state. That's like saying poor idiots shouldn't be charged income tax because they can't figure out the 1040EZ.

3. Your country and its states are broke. The internet has been given a free pass and now it's time for it to help ease the burden.

4. I can't wait to see you squirm when they float the idea of VAT.

Unfounded huh?

[www.washingtonpost.com]

I beg to differ.

That doesn't stop states from trying to collect, but up theirs.

WHAT?

YOU are only under the jurisdiction of ONE state. You only have to send ONE tax return in. With ONE box for "untaxed out of state purchases." Add them up as you buy them in a spreadsheet (you obviously have a computer if you're buying online) and send in the money on April 15th.

A small business that sells online, under the f*ktarded system NY and NC want to make federal law, would somehow magically be under the jurisdiction of all 50 states plus DC. This business would have to fill out 49 more tax returns every year than they do now. Each tax return would need to be prepared according to the tax law of a state where the owner may never have set foot. So he might need a couple dozen books on tax rates, what categories are taxable where, etc. There is NO standard for those things. (Example: UT taxes food, some states don't tax clothing, CA taxes clothing but not food. Oh, and what is defined as food? What about pet food?)

Since Amazon is so huge, it would be easier for them to do this than it would be for just about anyone else. A couple extra people on the staff would take care of managing this regulatory mess.

Amazon is actually being really cool fighting this on behalf of The Internet, because for a small business it will be much more crippling. If you have 3 employees you don't want to add a fourth just because some dumb ass state legislatures can't balance their budget 3000 miles away from you.

We need to eliminate sales tax entirely and shift that revenue generation to income tax where it belongs. THAT would solve this problem. State sales taxes in the 21st century are an anachronism.

(I lived in Durham, down near Streets at Southpoint. We got our power back first in that 10 day outage around 2003ish because GOD FORBID the mall not have power!)

And pollen...OMG, it's TERRIBLE this year, especially with the heavy rain in May and so far in June. I'm addicted to my allergy meds. :(

@RobertW.TX: Deductions are a way to incentivize behavior that (theoretically) will benefit you or society. Getting an education, having children, donating money or items to charity, buying a home, installing energy-efficient windows on that home, etc. Getting rid of deductions would remove that tool. I'm not sure that would be entirely negative, but it would have ramifications. They should be taken into consideration.

@samhell: You can rent the French Foreign Legion at a pretty good rate, but they pretty much all speak French.

@Canino: I think that little war in Vietnam did a lot to hollow out the military.

"First in Tights"

When I lived there, I even considered *altering* my own license plate thusly, but decided not to when I realized

a) most people wouldn't get it, and
b) Police in NC don't take kindly to Damnyankees, 'specially in them small towns like Hickory, Asheville, etc.

@RobertW.TX:

When Steve Forbes was proposing a flat tax, he was at 17%, and that would come up about $200BN short of current revenue levels.

Realistically, a flat tax would have to be in the 20-23% range to actually be revenue neutral.

@Cant_stop_the_rock: A product that is taxed cost me more than one that isn't. A product that is shipped to me cost more than one that isn't shipped. A product that is shipped and taxed cost more than either of the first two cases.

Get it? If not, I might be able to put together an example using peanuts, or some such thing.

"Reagan had to rebuild the military after it was devastated by Carter"

Not true. Military spending under Carter increased from 4.7 percent GDP to 5.2 percent GDP.

There was one project they'd been working on on and off for 10 years, getting paid for their billable hours when they worked on it, and it never got built. 10 years of delays and political appointees changing plans for nothing, no to mention the money paid out for something that was never built. The taxpayers were lucky the company was very honest and didn't bill for stuff they hadn't done.

Unfortunately, this was a really common story for the company, and it was really frustrating, even for those of us who were benefiting by the stupidity of the government and organizations who were throwing money away on designs they didn't use. It wasn't that the designs were bad, either. Most of the projects were simply never completed because the people in charge of the project were replaced or retired, and the new person decided to put their own stamp on the project. Such a waste.

I do miss NC, though I do not miss your pollens. :)

Sounds good. Lets do it!

@theodicey: Additional $$$ does not equal additional government bureaucracy. There are many other factors than just raw dollar amounts. Also, Reagan had to rebuild the military after it was devastated by Carter, for one thing - and that wasn't cheap - and the end result was well worth it many people will tell you.

I don't disagree that many people, including myself, were severely disappointed at the lack of fiscal conservatism by Bush I and Bush II.

Stuff? Which stuff? The stuff we never asked for that we are told we "need?" The stuff that could be cheaper/faster/better if handled by the private sector with actual competition that could be paid for by those that want it?

As long as the keep the public stupid and hungry they can always sell them education and a meal.... and we keep buying the same thing over and over and over and over and over. The government isn't going to change.

The "change" is your employment status, as in, you are now unemployed. The "hope" is you hope you can pay your mortgage and you hope you can find a new job. Careful who you vote for........

What?! How did you get away with only 60%? You just don't care about all those poor people do you? Selfish....

I actually broke even on my tax bill this year... I was just going to mail them a picture of my middle finger and a bold print "NO!"

:-P

Don't make me laugh. There hasn't been a fiscally conservative Republican President in 50 years. The only real fiscal conservatives were Clinton and Carter.

[en.wikipedia.org]

If they are breathing.

Welcome to North Carolina...we've got great roads.

The idea of expecting residents to keep track of all out-of-state purchases throughout the year, and then remit sales tax owed to state taxing authorities is silly, and doesn't work. It makes far more sense for mail-order businesses to collect it.

Remember, the tax is owed either way; Amazon is currently relying on the fact that most people simply fail to pay it, which makes Amazon's prices appear lower, at the expense of local competition.

Well, not really. I'd actually like to have more of the 60% the government currently steals from me, but the needs of the lazy outweigh the needs of the hard-working.

I've been told that's a very anti-social idea. I'm fine with that. You want to eat, live and be happy? Great! Do work.

Also, how do I value all my assets, every single year? How much is my collection of DVD's worth? Do I have to inventory my pantry every single year to account for fluctuations in my supply of Dinty Moore Beef Stew? Do I have to adjust the value of the frozen ground chuck in the freezer to the grocery store price as of December 31st? How much less is carpeting worth two years after installation? Can I adjust the depreciation by the number of kids I have?

These are actually all questions that are answered in the current tax code for businesses. These things take up a gigantic amount of it; far more than the tax code for individuals. Calculating current asset value and depreciation takes a hell of a lot more than five lines. I'll take a 1040 over that nightmare any day of the week.

@morlo: Yep, there's some truth to that. You would be amazed at all the money my city has wasted on "consultants" and similar things. Millions of dollars. And it's no surprise that the consultants are friends with people on the council.

They also paid some "artist" $100K to design some sculpture garden next to city hall and he put about 3 simple ideas on paper. Then they decided they didn't like it and he quit, taking his money with him.

Sure, local governments have corruption and waste, but it's dishonest for voters to say that's *all* it is. One man's fat and waste is another man's crucial government services. People are all for "reduced spending" right up until it reduces spending on fixing the potholes in front of their house, or on keeping the DMV open at hours convenient for them.

The current system expects people to pay taxes under a tax code impossible to read let alone understand. Here is an eyeopener I have used several times. A printed version of Title 26 of the United States Code (ie tax code) is available from the US GPO. It is 19 volumes and consists of 14,500 pages. Assuming you can read 1 page per minute (laughable with complex documents like the US tax code) it would take you 241 hours or 30 days reading 8 hours a day to read the US tax code.

To add insult to injury Title 26 is far from comprehensive when it comes to determining your tax burden. There simply is no complete document of all the laws that effect taxation in this country, which is insane.

(Also, Sleazly refused to commute any death penalty sentences, even when presented with fairly strong evidence of innocence, because as a prosecutor he put some of them there and then was asked to commute sentences on men he had locked up who now appeared to be innocent. Conflict of interest much?)

@HurtsSoGood: I think 12% would fund a lot more than you think. I see a lot of rending of clothes and gnashing of teeth over the fat cats that pay taxes at a lower rate because of fancy accounting. Flat tax would solve that.

Cut spending? How about massively reducing the number of federal employees working for the IRS because of the implementation of the flat tax?

@Canino: Only the guys in the other party are liars.

Of course, I am probably being silly, connecting taxes with actual services.

@Gramin: Yeah, if there's one thing you can say about Bill Clinton, it's that he is definately NOT a liar.

Figures! Always go after the little people who are just getting by.

@sirwired:

Amazon has the means to pay the tax. But the costs outweigh the benefits. Why "suck it up" when it's cheaper just to stop doing business? I don't fault Amazon. This is a mistake made by NC.

@Canino:

Oh no, I mean Clinton. Reagan was a liar and a racist.

If you then modify your tax to only count adding to cash position, that won't work either. Employers would then start loading up on compensation via non-cash fringe benefits to avoid payroll tax.

"Simple" ideas end up being more complex than "5 lines of very simple arithmetic."

@RobertW.TX: I've been the flat tax guru for my circle of friends for a while, trying to flip them all to my opinion. None of them really had any idea of the types of taxes that can be had, but I'm constantly championing it. One person at a time, it's slow but at least I'm making them aware of the alternatives out there. They know keywords like consumption tax and VAT tax...but they dont' realize the pro's and con's.

Little by little I try to bring them on board the Flat Tax train...the obviously fair way to tax everyone across the board.

I find it funny that rich people are "looking out for those less fortunate" when they say flat taxes are bad but consumption taxes are good. hypocrites and asshole one and all.

Personally, I think that Amazon and other online retailers should suck it up and go ahead and pay sales tax. It would not be as difficult or expensive to implement as Amazon claims. (They already do it for target.com, which they run.) I realize this would probably take federal legislation. Certainly calling an affiliate a "substantial presence" is a bit of a stretch.

@Gramin: You mistyped "Ronald Reagan".

Of course, the same people who swear that the Flat Tax or Fair Tax or whatever they're calling it nowadays is the silver bullet that will fix everything would scream bloody murder at the first mention of cutting DoD's budget.

Or you'd have to cut spending, but where? You tell me. If I had to do the cutting, I'd start with that five-sided building in Alexandria, VA. Plenty of pork to cut there, I guarantee it. Of course, the same people who swear that the Flat Tax or Fair Tax or whatever they're calling it nowadays would scream bloody murder at the first mention of cutting DoD's budget.

If I lived in NC, I would be loathe to purchase anything from the Internet. Why pay taxes on top of shipping?

@Canino:

If only Bill Clinton could hold the Office again. He reduced the Bureaucracy more than both Bush Sr. and Bush Jr. Ironically, they're Republicans and they're supposed to reduce government, yet, under their control, government grew!

@RobertW.TX:

Sounds good in theory. Except for this thing called the AMT (alternative minimum tax) and the labor it takes to change the tax code. Since taxes are raised by Congress, it means Congress has to write a new bill, or rather, several new bills. And, whether you like it or not, I think most Americans believe they should get deductions for education expenses... and for charitable contributions... and for having children.

Again, what you say is nice in theory, but in practice, it's much more dificult and complicated.

I really think we need to just start over...scrap the government, throw the bums out and start from scratch. It is getting ridiculous when your tax combined is approaching 40%+, and you STILL have to buy your own healtcare.

@RobertW.TX: That would require a reduction in the bureaucracy, which means someone would have to give up some of the power they've accumulated. Don't count on that happening any time soon (although I completely agree with you).

I was just thinking that myself. Probably too much money in it for Amazon to drop the state of NY though. But thats OK, I just buy used via Amazon. Its cheaper, there's no tax and Amazon still gets their cut - and NY doesn't. Seems like a win-win-win to me.

@Gramin:

Oops... I didn't finish my first thought. They don't have the manpower to pursue the average Joe who avoids paying 10K in taxes. However, they're perfectly capable of pursuing a large corporation attempting to avoid taxes.

Set a poverty line, no one pays anything on the first 20k say. Then tax everyone a flat 10 or 12% on the money above the poverty line. No deductions for anything.

My taxes would be 5 lines of very simple arithmetic. Everyone could understand their taxes, a laudable goal in my opinion. And the IRS could be downsized because they would only be responsible for verifying income.

Seams like everyone wins and no one could credibly call the his or her tax burden unfair.

My $0.02

@dragonfire81:

Actually, it's not flawed. The IRS is not capable of pursuing the average Joe who evades the IRS.

The market share businesses pay taxes. Period. Show me a large corporation that avoids taxes. Your claim is unfounded. I see financial information for middle market companies on a day to day basis and I can say, without a doubt, they're paying taxes.

@Canino: The thing is that raising taxes is the easy way out. It takes thought and effort to craft a well detailed plan for dealing with less revenue, it takes very little thought or effort to raise taxes. And lets face it, while there may be bright minds in government, they generally don't exist in positions elected by popular vote (with some exceptions). The unfortunate truth is I don't think most politicians have the ability or will to do very much to oversee or reduce spending.

California sent me a letter wanting me to pay income tax on some funds. The money wasn't wages, I have not been to CA for decades. So simply having someone in CA send you money could set off their revenue department coming after you.

1) The IRS is massively undergunned and does not have the resources to handle all the tax fraud/evasion that goes on.

2) Most medium size and major business people, those with "market share" as you put it are experts in finding ways to pay next to no tax (major corporations do it all the time too).

Being taxed is certain, but the government actually getting all the tax dollars they are owed is far from it.

I really think that if we need to raise revenue, we should raise the tax on everyone directly either in income or a general sales tax. That way the costs will be less per person and not look at certain groups to bare the costs.

One reason that governments are increasing enforcement of infractions that bring in fine income. There are many examples of this enforcement being used only to increase income. They should only be concerned with the actual issue: speeding, parking, whatever. Instead they are playing gotcha like credit card companies fees.

@vladthepaler:

I'm going out on a limb here, but I think the benefits (added income) outweigh the costs (taxes) in NY. Though NC is 10th in population, it's 38th in household income, below the median US household income. Easier to cut out NC than NY.

@nucwin83:

Maybe the little guy doesn't report revenue, but anyone with any type of market share does report income from internet sales. It's much cheaper to report it than to get hit with fines after the IRS catches them. Say what you will about government, but their are only two certain things in life: death and taxes.

@Mark:

Likely to get overlooked? I doubt it. Amazon caught it and I'm sure others will too. And if they don't catch it right away, they'll definitely see it when that new tax comes across their sheets.

The entire country has gone tax crazy. I wish elected officials would do something other than sit around thinking up more ways to tax tax tax and spend spend spend.

I posted to a city council member's blog asking him to think of ways to save my money instead of thinking of ways to spend it. The reply was basically something like "your comment has been noted, now let's talk about the new arts center we want to build".

Business just leaves.

The best part? It sounds like they're not leaving because of the tax per se, but because of the logistics of paying/enforcing it.

Yay for big government!

I'm guessing those folks are also the ones who think that everyone reports income from internet sales on their tax returns every year.

Sadly, this provision is buried deep in a much larger bill so it is likely to get overlooked.