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Internet Tax Essay

The sign at Wal-Mart says, “99 Cents. ” Although, if you go through the checkout line and greet the cashier with merely a dollar, the cashier would laugh at you. The price isn’t ninety-nine cents, it’s $1. 06. The taxman at our friendly Raymore Wal-Mart claims an additional 7. 45% of one’s hard earned dollars. The additional seven cents doesn’t sound like much, but it is when it’s seven additional cents for each dollar of the thousands of dollars that a person spends at a business like Wal-Mart every year. These seven-cent deposits go to the Missouri and Raymore tax funds.

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Taxes that help pay for public education, Medicaid, and other state and local services (Alster). There is only one problem, a new form of commerce is taking business away from normal “brick and mortar” businesses like Wal-Mart. This form of commerce isn’t new, it’s actually a few years old and it’s growing exponentially now. This new standard of commerce is called “electronic commerce” or “e-commerce. ” E-commerce comprised of $4 billion dollars in revenues in 1997 (“Let’s Not Rush”), which is almost negligible to the trillions of dollars done in total revenues in the United States.

Although, it is forecasted to be much more popular in the future. Shopping on the Internet has many benefits over shopping in local stores. E-Commerce, or electronic commerce, is commerce done over the Internet. The Internet is seen as the future for business and information technologies. Why would a person want to spend a few minutes getting dressed to drive fifteen minutes to Wal-Mart to spend an hour or two shopping, and another half an hour, on a good day, checking out and driving back home.

In the middle of all that, don’t forget the hassle of trying to find the right toy, while listening to obnoxious kids and dealing with sub-par customer service. There is another problem, most stores aren’t open 24 hours a day like Wal-Mart and QuickTrip. The biggest problem with regular business isn’t the customer service, or busy lines, it’s the six to eight percent sale price boost that occurs at the end of that busy line.

Until October 21, 2001, by the way of the Internet Tax Freedom act (“Bill”), any shopping done on the Internet with a business not located in your state of residence isn’t required to charge its customer a single cent of sales tax. In other words, a person saves 7. 45% by purchasing their goods from the Internet instead of Wal-Mart. That in itself is enough to bring booming business to the Internet, not to mention that you can buy stuff online at four in the morning with no clothes on and no one else in the world would ever know.

Although a person saves paying sales tax, the customer must pay for the products to be delivered. Depending on how much you spend on the Internet, this fee may be a little more or substantially less in relation to the money saved by not paying sales tax. There is a hidden cost for shipping when a person shops at Wal-Mart also. Don’t forget about the gas you burn driving there and back, the slow wear and tear on your vehicle of choice, and all the time you spend driving around town looking for the best prices.

On the Internet, there are web sites that tell you the best prices for products and where to get them. Buying some items on the Internet is the only way to go. Ever buy a computer for $2,000 and pay an additional $150 in taxes? Not on the Internet. It might cost forty dollars to have it shipped, but that extra $110 would fit nicely back into a wallet. The Internet tax Freedom Act from 1998 guarantees no sales taxes till after October 21, 2001. The act also founded a commission to research and plan a way to tax the Internet. The problem is very complex.

For instance, pretend person A owns a business on the Internet. Person A lives in Missouri but the computer that houses his business is in New York. Person B comes along and buys something from the web site. Person B lives in Kansas. The problem lies in that, Missouri, New York, and Kansas all want to collect that sales tax. A person shouldn’t have to pay tax on something three times though. The debate is over who gets the tax. On the other hand, what if the business is housed on a computer in London, England, then what happens?

Don’t forget that the next customer could be from China as well. New technologies lead to new problems. No matter what happens, if there is a sales tax, it will discriminate against somebody. The only explanation I can see is to not have a sales tax, but that discriminates against normal “brick and mortar” businesses, unless sales taxes are abolished nationally and higher income taxes are paid instead, which may be the only viable option. The Internet is a growing commerce, but it will never totally replace “brick and mortar” businesses.

When its 5:00 p. and there’s nothing in the fridge for dinner, ordering bread and lunchmeat on the Internet isn’t a feasible option, driving to Price Chopper is. Grocery stores probably have the least to worry about. Who would order milk or ice cream over the Internet? Non-consumable goods, on the other hand, have a lot to fear. Clothes, electronics, music, cars, furniture, toys, and many other items are quickly finding themselves on the Internet, all presently tax-free. Many items not included in general store stock are easily obtainable on the Internet.

There are generally more variations and brands to chose from on the Internet, all accessible without driving all over town. The largest fear for most people who are interested in shopping online is Internet security. People worry about their credit card numbers getting stolen, products not getting delivered, and other problems. The easiest answer to that is to use large well-known stores online. Don’t buy something from some guy who claims he has what you need. Seek other peoples’ opinions about the site as well.

E-mail the store and ask about their security issues, and as far as that goes, call them and place the order over the phone if too concerned. New 128-bit digital certificates used for encryption of messages on the Internet protect customers. If a person catches a message between a customer and the store, the person won’t be able to read it because its encrypted and it could take hours or days to crack the code (“Is it safe”). It’s more likely that a cashier at a local store would memorize your credit card numbers and use them later.

As far as security goes, when was the last time a person got robbed in the Internet store parking lot or got car-jacked on the way home? Ever have car problems while out shopping? Not on the Internet. The only thing you have to worry about is accidentally turning off the computer or the Internet service provider crashing. While shopping on the Internet, customers are in the safety and convenience of their own home. The Internet is undeniably the best source of information in the world, and it may very well be the next standard for commerce. No taxes and other benefits have made it possible for e-commerce to grow at an outlandish speed.

Taxing it would slow its growth, although, finding a way to tax it fairly is the hard part. “Brick and mortar” companies are in rich supplies these days. In the future, they will probably dwindle, but they’ll never disappear. Choosing the right product is a lot easier seeing it first hand, and some people enjoy shopping simply for the social activity. Meanwhile, the rest of us can sit around in our pajamas and buy stuff for great prices at two in the morning; paying shipping definitely sucks, but it’s better than paying Uncle Sam, at least for now.

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