The image below is not a quilt. It’s the quilt-work of our sales taxes across the United States. It’s a mess because it exposes the thousands of smaller taxing jurisdictions. Municipalities, counties, water districts, districts that exist only to collect taxes for stadiums, etc. overlap and span ZIP codes. In fact, they rarely conform to ZIP codes; that would be too easy.
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Like our outdated locally-controlled education system (if you can call it that), our sales tax system is due for an overhaul. I guess that it was fine when a retailer sold across the counter, but retail sales on the Internet requires a new sales tax model.
Updating tax tables, collecting, filing returns, and remitting sales tax for over 9400 taxing authorities imposes a major overhead on American businesses. A healthy parasitic industry has flourished around the substantial data processing required; Vertex is the industry leader. Integrating the tax tables, calculations, and reports into an ERP system is a big project, as order entry, order processing, and accounts receivable systems must be customized. This overhead is effectively yet another tax atop the sales tax itself.
The Streamlined Sales Tax Project (streamlinedsalestax.org) was created in 1999 by the National Governors Association and the National Conference of State Legislatures ostensibly to simplify sales tax collection. Their website’s front page today, in large font, ungrammatically asks, “What we actually do?” Oh well, it’s a bunch of government employees. What did you expect?
It appears to be an attempt by its 24 member states to collect state sales tax. Is it the right organization to rally round? I don’t know, but we must end the insanity of our current sales tax “system” now.