Should you be taxed for the state and perhaps also for the city each time you buy food, health-related devices, or nutritional supplements online from various manufacturers, distributors, or Amazon.com? What do you think? Should online-only sellers collect sales taxes the same as health food stores do in Sacramento? Should taxes be applied to online-only sellers of food and supplement items or even homeopathic remedies? Check out the Wednesday, March 23, 2011 Sacramento Bee “Head to Head” article by Ben Boychuck, “Should online-only sellers collect sales taxes like in-store retailers?”
In the Sacramento Bee article, Ben Boychuk took the ‘no’ side, and Pia Lopez took the ‘yes’ side. See the article to get a handle on what this means to people who must heavily rely on sales done online because of age or disability or simply because Sacramento health food stores and supermarkets or ethnic groceries don’t have the item in stock. Not all stores in Sacramento have special orders services for individual customers who only need a small amount of any item. And some Sacramento supermarkets offer special orders, but at the retail price.
Online, not only are prices usually lower if you dig deep enough to find sellers at comparable prices, but without paying taxes on foods and supplements or alternative remedies, people with special needs, for example the home-based elderly or those with disabilities who can’t easily get to food markets can have the convenience and the lower price of buying foods or vitamins by the case online without paying heavy taxes on necessary items such as vitamins, canned food, and grains or special foods and devices such as a slow breathing machine for lowering blood pressure or relaxation, or for various other particular health needs.
If you’re buying food or supplements online because Sacramento supermarkets, health food stores, or ethnic groceries don’t carry what you want, should you be required to pay city and state taxes on those items regardless of what state the distributor or manufacturer is located?
For example, you buy a case of fruit juice, a case of salmon with no salt added, a device that calms you and helps you lower your blood pressure, and you also buy online a variety of homeopathic supplements, vitamins, minerals, or other nutraceuticals online. Should you pay that 9.5% state tax rate if you live in Sacramento? The tax rate changes from time to time. Should you pay state and city tax when you buy items online?
What if you walked away from conventional medicine unless there’s an emergency, to avoid the high price of prescription drugs? Or what if you order your prescriptions filled online from out-of-state or out-of-the USA pharmacies? Should you always be taxed at the state’s rate and the city’s rate because you live here, regardless of where the items are located–in different states, for example?
What will be the consequences of a new law, if it ever passes, requiring taxes to be levied on any item bought online, if the online seller has a warehouse with the item in California? Will the online seller then re-locate elsewhere to avoid charging taxes to online sellers? If you buy online just to avoid taxes, a lot of stores will go out of business in Sacramento, unless those stores start selling online to other states. And what happens when all states require you to pay taxes, will the online only sellers then go overseas or to Canada or Mexico?
On the other hand, you have people visiting stores to learn about a product and waste the time of the sales person only to buy the same item online to avoid taxes. One big online seller of food and nutraceuticals such as supplements and health-related devices is Amazon.com. Another is Overstock.com, where you can buy big items such as furniture or other items not related to vitamins or homeopathic remedies.
Let’s look at benefits. You do save money on vitamins by buying them online much of the time. Health food stores have to mark up the price a little to make some type of profit. You could be a whole case of food items online. It’s a blessing to be able to buy larger food items online, especially for those who don’t drive and can’t carry home a whole case of no-salt added cans of salmon or a case of cherry juice to relieve arthritis aches.
What’s in the works currently is Assemblywoman Nancy Skinner’s D-Berkeley bill. Her bill could add up to $500 million to California’s state treasury. After all the Sate Board of Equalization wants you to pay as much as $1.7 billion each year in state taxes for buying products online.
If California puts the tax bite on you for buying online goods to save a few dollars by not being required to pay state taxes on anything you buy from sellers on the Internet, the legislature in California will soon realize that not much money would in actuality be raised after all.
What probably might happen is that the online sellers will cut ties to affiliates in all the states affected by the tax requirement. States currently requiring people to pay taxes on anything bought online from those states include N. Carolina, Colorado, Hawaii, Illinois, and Rhode Island.
And Amazon.com announced last month it was closing a distribution center in Texas over tax disputes. The idea is not to have a bricks and mortar store or warehouse, that is a physical presence doing business. That’s because the law requires the affected states to collect state tax or use tax. Some online sites actually collect state taxes as well as city taxes.
When and if Amazon.com cuts itself off from the various sales companies in the states affected, it hurts small business owners. When the small businesses lose their online income, they’re in no position to pay taxes to the state because business has gone elsewhere to other sellers online not affected by the various tax laws in those states affected. But what if all states pass these laws?
One way to solve this problem is not to tax the average consumer who buys online, most likely to save money or because the person can’t carry the packages home from the story due to age or disability. So how do you feel and what do you think?
Should shoppers in Sacramento tell the legislature to lower the 9.75 tax rate in Sacramento? Should individual state taxes be lowered? Or should corporate state tax rates be lowered?
Taxes hit people hardest who earn the least amount of money. For example an unemployed person or unpaid homemaker who earns part time online at home in spare hours, around $4,000 a year as his or her only income working inside the home online as a freelance worker–artist, writer, composer, crafter, or similar independent contractor has to pay $590 a year in state taxes.
That’s 15.3 percent tax on a pittance of income just because it’s counted not as miscellaneous income but as a home-based business run by an entrepreneur. That’s the same rate an entrepreneur pays who earns a six figure income from a business run at home. The high tax rate also applies to retired people who don’t earn pensions and must work to supplement social security which is what they rely on to pay the rent and food expenses.
What do you think about taxes being charged on vitamins and packages of food that people buy online because they aren’t able to get to local health food stores in Sacramento or because the store doesn’t carry the item or jacks up the retail price far beyond what it costs to order online?
For example, a 16.9 ounce bottle of Carlson’s cod liver oil may cost about $45 in certain health food stores in Sacramento, unless it’s on sale where it may be reduced to around $32 or $33. But if you order it online from some companies such as Swanson’s Vitamins or through Amazon.com, the price may be around $23. Also Swanson’s offers a flat fee of $4.99 mailing at this date. And Amazon.com offers free mailing on certain items of “its sellers” if you purchase at least $25. worth of goods. But be aware, a lot of items on Amazon.com are priced at $24.99. So unless you buy more items that qualify, that is are
considered Amazon’s sellers, you’d probably get charged the standard shipping fee.
Note that some online retailers, distributors, and even some manufacturers price their items as a number ending in 99 cents, but require you to buy more items to meet the requirement for free shipping, and the items have to qualify. Check this out at Amazon.com before you buy various products online. Do the sellers qualify as Amazon sellers and do you have to buy extra items that also qualify as Amazon sellers to get the free shipping on items that add up to $25 or more? Various sellers charge varying rates for shipping.
Basically, any tax system affecting food, vitamins, and health devices needs to be fair. The last thing a buyer wants is to turn the marketplace lopsided. So what do you think: Should online-only sellers collect sales taxes? And if so, the same as retailers or a different price? Remember, you may or may not get free shipping depending upon what you buy online and how much. Then again, it saves a trip to the store using sometimes costly public transportation for some and driving in heavy Sacramento traffic for others.