It’s not often I get a request for a topic. Hell, it’s not often I even get comments on this thing, so it’s refreshing just to know someone’s reading! Anyway, Chuck yearns for me to opine about NYS’s attempt to collect sales tax on Internet and Indian reservation purchases by putting a place for it on the income tax form. Chuck has odd yearnings, but that’s probably a different blog entry altogether.
I have mixed emotions on NY’s desperate attempt to collect these taxes. On the one hand, by the law, they are entitled to collect this tax. There is precedent for requiring the buyer to pay the tax directly to the state. This practice has gone on for years at the DMV when you register a car purchased via a private sale. On the flip, the mechanism by which they are collecting the tax is a bit after-the-fact, and that makes it hard to swallow. But income taxes are always trued up annually and that’s pretty after the fact. Again, lots of precedent.
I think the problem I have with this tax collection is two-fold. First, sales and income tax have always been separate taxes. I’m not sure I like the idea that my taxes are cross pollinating. It seems only a matter of time before someone reasons that income tax is really just a purchase of government services and therefore subject to sales tax. And hey, sales tax is really just a purchase of municipal services, so it should be subject to sales tax, which of course is also taxable. At this rate, only math majors will be able to pay their taxes accurately.
And speaking of accuracy, that brings me to point two. I do applaud the state giving us an out. Trying to accurately come up with the sales tax actually due would be a monumental pain in the butt. So they provided a handy alternative table. Based on your income, it says how much back due sales tax you ‘probably’ owe. Then all the talk radio shows and your mother tell you that putting a $0 in this slot is just begging for an audit and the next thing you know you are signing a form that swears you owe exactly as much back tax as the table says you probably do. This is a bad precedent. Sure, it’s a low number this year so they dupe you into basing your out of state purchases on your income, despite any evidence that those two things are related. But I’m nervous. How long will it be before the IRS suggests that my income should be based on my height for tax purposes. I’m tall, that doesn’t bode well for where I’ll fall on that table.
But I’m not worried. My parents will keep me apprised. After all, they are retired and have ample time to listen to all the talk radio shows which will ultimately solve all these problems by blaming them on Bill Clinton.