Internet Sales Tax

[Smitty37]

If I recall Amazon recently lost their fight on this.... maybe why they are supporting the measure now. THEY want a "level playing field". and THEY have the money to lobby for this whereas small businesses don't.

They have changed their business plan where they expect to have a physical nexes in most states and would be subject to collecting ther sales tax anyway == I it is related to establishing very fast delivery. I think the fight they lost was in a State court and had to do with the fact that they used servers located in that state and the question was whether or not that established a nexes. Because of their change in business plan they did not appeal. Amazon has also found that they collect the sales taxes for many other business who where Amazon get the order and collects the money but the item is sold by the other business -- Amazon collects the sales tax for those businesses and charges them a fee for doing so. Wal-Mart also supports it I think, because they have a physical presence in all 50 states and already have to collect sales tax on all internet sales. Dell Computer probably by way of 'service' people also collects from all or nearly all the states that have sales tax.

I think if this is implemented, when the smoke clears, there will be very little new revenue to the states. Cars, boats, RV's, Mobile Homes and a lot of other big ticket items the sales tax is collected, not by the seller but when the item is registered. Many food items are exempt, clothing is exempt in several states, downloaded intangables (i.e. software) is exempt in many states, business to business transactions are usually exempt and any sales taxes due are usually paid by the business because they are usually already subject to sales tax audit and internet transactions will not be difficult to find, foreign sales, as much as 20% of transactions for lots of businesses are exempt. So that 225B number is in my opinion highly inflated since (I believe) it includes all of those things.

 

[PR_Princess]

If I recall Amazon recently lost their fight on this.... maybe why they are supporting the measure now. THEY want a "level playing field". and THEY have the money to lobby for this whereas small businesses don't.

One way for Amazon to eliminate competition, increase diversity of offerings and at the same time make money by fees is to incorporate whatever small businesses they can under the Amazon umbrella.

By making it onerous for all but the tiniest of business to operate independently (or operate period), would certainly help Amazon increase their reach. It's hard to grow when you are already on top, but this is certainly one way for Amazon to do it. Amazon is interested in Amazon, not a level playing field.

FWIW, Amazon's sales last year were $61.09 BILLION, up from $48.08 BILLION in 2011

 

[Smitty37]

If I recall Amazon recently lost their fight on this.... maybe why they are supporting the measure now. THEY want a "level playing field". and THEY have the money to lobby for this whereas small businesses don't.

One way for Amazon to eliminate competition, increase diversity of offerings and at the same time make money by fees is to incorporate whatever small businesses they can under Amazon umbrella.

By making it onerous for all but the tiniest of business to operate independently (or operate period), that would certainly help Amazon increase their reach. It's hard to grow when you are already on top, but this is certainly one way for Amazon to do it. Amazon is interested in Amazon, not a level playing field.

FWIW, Amazon's sales last year were $61.08 BILLION, up from $48.08 BILLION in 2011

Yea and I don't think WalMart is in a big need of a level playing field either even though internet sales is a small part of their business, their buying power is humongous.

 

[joefyffe]

I would expect more creativity from you, Smitty!!

COLLECT the tax for Hawaii!! Over a year or so, that might amount to $20-$50!!!!

THEN, schedule a trip TO Hawaii. Make sure to list the PURPOSE of your trip to deliver the money you owe them!!

Now, your $5000 trip should be TAX DEDUCTIBLE business expense!! You save at least a grand in income tax!!

Ed: I like the way you think! :biggrin: Another thing I have been thinking about, what if I were to buy a new table saw. In indiana, that is used for the manufacture of product and is tax exempt. I haven't seen anything about anything being tax exempt on this internet tax issue! ?????

 

[Smitty37]

I would expect more creativity from you, Smitty!!

COLLECT the tax for Hawaii!! Over a year or so, that might amount to $20-$50!!!!

THEN, schedule a trip TO Hawaii. Make sure to list the PURPOSE of your trip to deliver the money you owe them!!

Now, your $5000 trip should be TAX DEDUCTIBLE business expense!! You save at least a grand in income tax!!

Ed: I like the way you think! :biggrin: Another thing I have been thinking about, what if I were to buy a new table saw. In indiana, that is used for the manufacture of product and is tax exempt. I haven't seen anything about anything being tax exempt on this internet tax issue! ?????

The figure of 225B in internet sales include tax exempt sales and sales in which tax is currently collected. Tax exempt include items like Cars, boats, RVs and Mobile homes because the tax is collected at time of registration but they are counted in the internet sales.

Busness to Busness transactions (and there are tons of them) are also included in that 225B on those transactions there is no tax collected because the items are going to be used producing business goods or services that will be taxed when sold to the final customer.

In business to business transactions where sales tax should be paid by the buyer it is usually paid because the buyer is already subject to sales tax audit and such transactions are easy for auditors to find..

It also includes intra state internet sales where the sales tax is already collected. In addition it includes sales of food and clothing which are exempt from sales tax in a lot of jurisdictions. It also includes intangables some of which (down loaded software) are not taxable in many juridictions as well.

In addition it includes international transactions where there is no tax due to any US state. For instance myself I buy nearly every thing I sell on the internet - no tax due because I buy most of it internationally and Delaware has no sales tax anyway.

90% of my sales are internet transactions - while today many of them would be taxable, well over half of my customers also sell finished pens and could get sales tax exemptions because what I sell is used in making the end product they sell to consumers and the tax is due on their sale. Additionally 15% - 20% of my sales dollar volume is international wih no tax due. In the end the states would be due sales tax on only about 20 or so percent of my sales and none of my purchases. I think nearly all IAP vendors would fall into that catagory.

 

[ed4copies]

Worldwide is 1.29Trillion, Smitty.

The figure I gave above is the US Dept of Commerce estimate of domestic sales, I would think.

 

[ed4copies]

As to WHY internet, this may help:

Top Consumer Reasons For Shopping OnlinePercent of Survey Citing ReasonTime Saving73 %More Variety67 %Easy to Compare Prices59 %No Crowd58 %Lower Prices55 %Spend Less on Gas40 %Less Taxes30 %Other3 %
Statistic Brain .com

 

[ed4copies]

According to Forbes mag, here is the impact:

1. The U.S. Bureau of the Census estimated there were $4.1 trillion in retail and wholesale transactions over the Internet in 2010, amounting to 16.1% of all U.S. shipments and sales.
2. Estimates put lost tax revenue at approximately $11.4 billion in 2012. California alone was projected to lose $1.9 billion; Texas, $870.4 million; and New York, $865.5 million.
3. Researchers estimated in April 2009 that total state and local revenue loss from new e-commerce in 2012 will be approximately $11.4 billion.
4. State governments rely on sales and use taxes for nearly one-third (32%) of their total tax revenue.
5. Local governments derive 11.2% of their tax revenue from sales and use taxes.

 

[Smitty37]

Worldwide is 1.29Trillion, Smitty.

The figure I gave above is the US Dept of Commerce estimate of domestic sales, I would think.

I would think it's all internet sales for US companies...I don't think that figure was developed only for the proposed bill so there would be no reason to exclude overseas sales..I'll try to check sometime today to see if I can learn more.

 

[rixstix]

TLR

I'm late to reading the discussion but for anyone that falls within the scope of collecting sales tax...

taxcloud.net

Has plugins available for many of the current ecommerce applications and is working on more as they are requested.

When you use their service, you make a single payment to TaxCloud and they take care of the individual disbursements to appropriate taxing authorities... at least as I understand the program.

There are other applications that currently perform similar functions for a fee. AFAIK, TaxCloud is currently the only no-fee version.

 

[Smitty37]

Worldwide is 1.29Trillion, Smitty.

The figure I gave above is the US Dept of Commerce estimate of domestic sales, I would think.

I would think it's all internet sales for US companies...I don't think that figure was developed only for the proposed bill so there would be no reason to exclude overseas sales..I'll try to check sometime today to see if I can learn more.

Here is an FAQ from the US Census

Question: Are foreign sales included in the e-commerce estimate?
Answer: The e-commerce and total sales estimates include sales covering all store and non-store retail locations in the United States operated by a firm selected in the survey. Sales made to a customer in a foreign country through a U.S. web site are included in the estimates.

I would think the DOC would do the same.

 

[ed4copies]

In that Forbes is rather conservative, I would look at their numbers as "low estimates".

However in further researching this bill, it passed the Senate, but is not yet even on the docket for the House (Republican controlled). I would give it less than a 25% chance of passing the House, in it's current form.

 

[Smitty37]

In that Forbes is rather conservative, I would look at their numbers as "low estimates".

However in further researching this bill, it passed the Senate, but is not yet even on the docket for the House (Republican controlled). I would give it less than a 25% chance of passing the House, in it's current form.

You might be right but there will be a lot of Republicans who support this bill because they come from sales tax states and as we found in our look at this most internet buyers are not trying to get away from sales tax so there isn't likely to be a ground swell of consumer opposition.

 

[ed4copies]

From my reading, Smitty, the House does not oppose the idea of the sales tax. But they DO oppose the burden it will put on small business, to keep track of all the states.

What MIGHT happen would be the adoption of one "internet sales tax" rate that would be collected by us on ALL sales and turned over to a "taxing authority" with our breakdown of sales by state. Then, each state would get their share.

This would be MUCH easier for the vendors to administer and still satisfy the supposed motivation of "leveling the playing field" for the brick & mortars.

This would also solve the problem of "tax exempts". Just like you "get back" taxes overwithheld now. When the penmaker filed his individual tax return for the sole proprietorship, they could add a line for "sales tax paid" This would then be applied toward any additional taxes owed, or returned if the sole proprietor has "over-withheld".

Makes the whole system quite simple.

 

[Monty]

.....This would also solve the problem of "tax exempts". Just like you "get back" taxes overwithheld now. When the penmaker filed his individual tax return for the sole proprietorship, they could add a line for "sales tax paid" This would then be applied toward any additional taxes owed, or returned if the sole proprietor has "over-withheld".

Makes the whole system quite simple.

Have you ever seen Congress make anything simple????:biggrin:

 

[sbell111]

In that Forbes is rather conservative, I would look at their numbers as "low estimates".

However in further researching this bill, it passed the Senate, but is not yet even on the docket for the House (Republican controlled). I would give it less than a 25% chance of passing the House, in it's current form.

My understanding is that the bill (S.743) passed cloture in the Senate but has not yet been actually voted on.

 

[sbell111]

From my reading, Smitty, the House does not oppose the idea of the sales tax. But they DO oppose the burden it will put on small business, to keep track of all the states.

What MIGHT happen would be the adoption of one "internet sales tax" rate that would be collected by us on ALL sales and turned over to a "taxing authority" with our breakdown of sales by state. Then, each state would get their share.

This would be MUCH easier for the vendors to administer and still satisfy the supposed motivation of "leveling the playing field" for the brick & mortars.

This would also solve the problem of "tax exempts". Just like you "get back" taxes overwithheld now. When the penmaker filed his individual tax return for the sole proprietorship, they could add a line for "sales tax paid" This would then be applied toward any additional taxes owed, or returned if the sole proprietor has "over-withheld".

Makes the whole system quite simple.

The bolded part would never work. This is because sales taxes that we collect aren't 'ours'. This is money that belongs either to the customer or the state (depending on how you look at it), not the business. This is why some jurisdictions require these funds to be kept in a separate account.

 

[Chasper]

Ed: I like the way you think! :biggrin: Another thing I have been thinking about, what if I were to buy a new table saw. In indiana, that is used for the manufacture of product and is tax exempt. I haven't seen anything about anything being tax exempt on this internet tax issue! ?????

Joe,
If you were a tool business and your bought table saws over the internet for the purpose of reselling them to your customers, the saws would be tax exempt. If you are in the pen making business and you buy a table saw over the internet for the purpose of making pens to sell, then the table saw is not tax exempt; but the pen making components are exempt. Resell is the key word. If you are buying something that will be resold, you do not pay sales tax, but the person you sell it to does. If you buy it to use it, you pay the sales tax. Joe and I both live in Indiana, rules vary in other states.

 

[Smitty37]

Ed: I like the way you think! :biggrin: Another thing I have been thinking about, what if I were to buy a new table saw. In indiana, that is used for the manufacture of product and is tax exempt. I haven't seen anything about anything being tax exempt on this internet tax issue! ?????

Joe,
If you were a tool business and your bought table saws over the internet for the purpose of reselling them to your customers, the saws would be tax exempt. If you are in the pen making business and you buy a table saw over the internet for the purpose of making pens to sell, then the table saw is not tax exempt; but the pen making components are exempt. Resell is the key word. If you are buying something that will be resold, you do not pay sales tax, but the person you sell it to does. If you buy it to use it, you pay the sales tax.

It probably varies by jurisdiction but tools used in the production of items to be sold can be sales tax exempt. I had a farm exemption in NY and tools I bought that were used solely by the farm were exempt from sales tax, I also don't recall paying sales tax on my Tractor, plows, habine and other pieces of big equipment. That was quite awhile back and could have changed.

 

[BSea]

From my reading, Smitty, the House does not oppose the idea of the sales tax. But they DO oppose the burden it will put on small business, to keep track of all the states.

What MIGHT happen would be the adoption of one "internet sales tax" rate that would be collected by us on ALL sales and turned over to a "taxing authority" with our breakdown of sales by state. Then, each state would get their share.

This would be MUCH easier for the vendors to administer and still satisfy the supposed motivation of "leveling the playing field" for the brick & mortars.

This would also solve the problem of "tax exempts". Just like you "get back" taxes overwithheld now. When the penmaker filed his individual tax return for the sole proprietorship, they could add a line for "sales tax paid" This would then be applied toward any additional taxes owed, or returned if the sole proprietor has "over-withheld".

Makes the whole system quite simple.

The bolded part would never work. This is because sales taxes that we collect aren't 'ours'. This is money that belongs either to the customer or the state (depending on how you look at it), not the business. This is why some jurisdictions require these funds to be kept in a separate account.

I think it would work. The business would have a line item that was the sales tax paid. The business may or may not be getting a refund. Regardless of that, the "Sales Tax Paid" amount doesn't change. It's no different than an employer withholding income tax from their employees. Depending on the amount, the employer makes regular deposits to the IRS throughout the quarter for income withheld during the quarter. After each quarter they file a return (941) showing what's owed. If they over deposited, they get a refund, If they under deposited they pay the balance. How would the internet tax be any different?

The fact that some jurisdictions require a separate account is not relevant. That's just a way (theoretically) of making sure the business doesn't spend the money before it's paid.

I would guess that the businesses would be required to make regular deposits to the "Department Regulating Internet Accumulation of Nuggets" (hereafter referred to as the DRAIN). So depending on your amount of sales, you might have to send your money down the DRAIN weekly, monthly, quarterly, or annually. Regardless, it all goes down the DRAIN. :biggrin:

Ok, I had to have a little fun with this.

 

[MesquiteMan]

Ed: I like the way you think! :biggrin: Another thing I have been thinking about, what if I were to buy a new table saw. In indiana, that is used for the manufacture of product and is tax exempt. I haven't seen anything about anything being tax exempt on this internet tax issue! ?????

Joe,
If you were a tool business and your bought table saws over the internet for the purpose of reselling them to your customers, the saws would be tax exempt. If you are in the pen making business and you buy a table saw over the internet for the purpose of making pens to sell, then the table saw is not tax exempt; but the pen making components are exempt. Resell is the key word. If you are buying something that will be resold, you do not pay sales tax, but the person you sell it to does. If you buy it to use it, you pay the sales tax.

In the State of Texas, you can claim a manufacturing exemption for any powered tool that causes a direct chemical or physical change that is necessary in manufacturing. Here is the language from Rule 3.300

Manufacturers may claim a Texas sales tax exemption for tangible personal property directly used or consumed in or during the actual manufacturing, processing, or fabrication of tangible personal property for ultimate sale if the use or consumption of the property is necessary or essential to the manufacturing, processing, or fabrication operation and directly makes or causes a chemical or physical change to the product being manufactured, processed, or fabricated for ultimate sale.

A while back, I sent a very long e-mail to the State Comptroller's Office with a bunch of different sales tax questions. I gave specific scenarios and one of them was that I was a woodworker and used a tablesaw to make the items I make. I asked if it would be tax exempt and they replied back that it would (if that was it's predominant use) and quoted the above. I also asked about saw blade and saw blade re-sharpening and was quoted the same again. I then followed up and asked if, as a penmaker, I used the saw for cutting blanks that were used in the pens I make and was quoted the same again.

I also asked as a penmaker about lathes and was quoted the above. However, a hand tool is NEVER tax exempt in Texas. I asked specifically about lathe tools and was told that they were not tax exempt since they were moved by hand.

 

[sbell111]

From my reading, Smitty, the House does not oppose the idea of the sales tax. But they DO oppose the burden it will put on small business, to keep track of all the states.

What MIGHT happen would be the adoption of one "internet sales tax" rate that would be collected by us on ALL sales and turned over to a "taxing authority" with our breakdown of sales by state. Then, each state would get their share.

This would be MUCH easier for the vendors to administer and still satisfy the supposed motivation of "leveling the playing field" for the brick & mortars.

This would also solve the problem of "tax exempts". Just like you "get back" taxes overwithheld now. When the penmaker filed his individual tax return for the sole proprietorship, they could add a line for "sales tax paid" This would then be applied toward any additional taxes owed, or returned if the sole proprietor has "over-withheld".

Makes the whole system quite simple.

The bolded part would never work. This is because sales taxes that we collect aren't 'ours'. This is money that belongs either to the customer or the state (depending on how you look at it), not the business. This is why some jurisdictions require these funds to be kept in a separate account.

I think it would work. The business would have a line item that was the sales tax paid. The business may or may not be getting a refund. Regardless of that, the "Sales Tax Paid" amount doesn't change. It's no different than an employer withholding income tax from their employees. Depending on the amount, the employer makes regular deposits to the IRS throughout the quarter for income withheld during the quarter. After each quarter they file a return (941) showing what's owed. If they over deposited, they get a refund, If they under deposited they pay the balance. How would the internet tax be any different?

If you were to overcharge someone sales tax, the overcharged amount does not belong to you. It belongs to the person that you just cheated.

This is far different than income tax withholdings because that is shown as a tax paid on the employee's taxes, not yours. Therefore, if too much income tax is paid, the employee will get a refund, not the employer.

 

[Smitty37]

From my reading, Smitty, the House does not oppose the idea of the sales tax. But they DO oppose the burden it will put on small business, to keep track of all the states.

What MIGHT happen would be the adoption of one "internet sales tax" rate that would be collected by us on ALL sales and turned over to a "taxing authority" with our breakdown of sales by state. Then, each state would get their share.

This would be MUCH easier for the vendors to administer and still satisfy the supposed motivation of "leveling the playing field" for the brick & mortars.

This would also solve the problem of "tax exempts". Just like you "get back" taxes overwithheld now. When the penmaker filed his individual tax return for the sole proprietorship, they could add a line for "sales tax paid" This would then be applied toward any additional taxes owed, or returned if the sole proprietor has "over-withheld".

Makes the whole system quite simple.

The bolded part would never work. This is because sales taxes that we collect aren't 'ours'. This is money that belongs either to the customer or the state (depending on how you look at it), not the business. This is why some jurisdictions require these funds to be kept in a separate account.

I think it would work. The business would have a line item that was the sales tax paid. The business may or may not be getting a refund. Regardless of that, the "Sales Tax Paid" amount doesn't change. It's no different than an employer withholding income tax from their employees. Depending on the amount, the employer makes regular deposits to the IRS throughout the quarter for income withheld during the quarter. After each quarter they file a return (941) showing what's owed. If they over deposited, they get a refund, If they under deposited they pay the balance. How would the internet tax be any different?

If you were to overcharge someone sales tax, the overcharged amount does not belong to you. It belongs to the person that you just cheated.

This is far different than income tax withholdings because that is shown as a tax paid on the employee's taxes, not yours. Therefore, if too much income tax is paid, the employee will get a refund, not the employer.

Therein lies much of my objection to the bill. I don't owe the tax the buyer does - the buyer does not owe the tax to the state in which I am doing business, the buyer owes the tax to the state where he/she resides. In my opinion there is no good reason to ask me to collect taxes to pay for government services that are not provided for me - regardless of how much or how little work is involved, they are making me responsible to a state government that should have no jurisdiction over me.

 

[PR_Princess]

Steve, I think you are misreading the sole proprietor. I would read the bolded part of statement to mean the sole proprietor as the pen MAKER...not pen kit seller.

When the pen maker (business owner) filed his taxes, he could claim any of the sales taxes paid on inventory purchases (and sent to DRAIN :biggrin:by the seller) as tax credit. This could happen as a line item credit on the schedule C, or K or whatever. As I understand the intent, it would a) make sure that the claimant was a business, and b) could be much simpler for both buyer and seller. More so than keeping track of dozens, hundreds or thousands of those individual sales tax exempt forms.

 

[BSea]

If you were to overcharge someone sales tax, the overcharged amount does not belong to you. It belongs to the person that you just cheated.

This is far different than income tax withholdings because that is shown as a tax paid on the employee's taxes, not yours. Therefore, if too much income tax is paid, the employee will get a refund, not the employer.

I agree that if you overcharge someone, then that's cheating. However, when you are dealing in fractions of cents, then there can be a discrepancy when you take into account the rounding per sale.

For Example: Let's say you sold 25 pens for $50 each. And the tax was 7.25%. The tax for the sale would be $3.63 for each sale. It's actually 3.625, but of course you round up. When you report the tax, you take your total sales of $1,250 (50 x 25), and calculate the tax on the sales, you get $90.63 ($1,250 x .0725). But you collected $90.75 (25 x 3.63). Did you cheat the customers? Of course not. I work in the payroll industry. For the 941 report (Quarterly Wage withholding Report) there is a line item for fractional cents to balance the report just for this type of rounding discrepancy.

Then there is the case where maybe a seller deposits his sales tax monthly, but let's say he made an error, and underpaid the tax. The error is discovered when the report is filed, and he pays the balance due. No customer got cheated, the sales were reported correctly when the report was files, It's just that a mistake was made for a deposit. In the same 941 report I mentioned above, there is a place to show the amount deposited, and if it doesn't match what is calculated, there is a place for Amount Due, and another for Amount Refunded.

I have to agree with Ed. This looks like a viable solution. In the event someone overcharges their customer (either intentionally or not), the government would be out of the loop. If it was done intentionally, then the person doing it isn't going to report it anyway. Yes it's cheating, and no I don't condone it. But I fail to see how that pertains to the discussion. And if it was done accidentally, and found out later, I'd expect the seller to contact the customer and return the overcharge. When that's not possible, then it's shown as additional income, and the seller would have to adjust the sales tax return to reflect a higher sales amount. So there is a balance due with the return.

Either way, I fail to see where the system mentioned wouldn't work. I'm not saying it's good or bad, I just can see how it would work.

 

[sbell111]

My thinking is that even though this bill has gotten tons of press, it's fairly unlikely to ever be passed into law because it will divide the House in ways that House leadership cannot afford.

Even if it does get passed, it might not survive a judicial challenge.

 

[Smitty37]

If you were to overcharge someone sales tax, the overcharged amount does not belong to you. It belongs to the person that you just cheated.

This is far different than income tax withholdings because that is shown as a tax paid on the employee's taxes, not yours. Therefore, if too much income tax is paid, the employee will get a refund, not the employer.

I agree that if you overcharge someone, then that's cheating. However, when you are dealing in fractions of cents, then there can be a discrepancy when you take into account the rounding per sale.

For Example: Let's say you sold 25 pens for $50 each. And the tax was 7.25%. The tax for the sale would be $3.63 for each sale. It's actually 3.625, but of course you round up. When you report the tax, you take your total sales of $1,250 (50 x 25), and calculate the tax on the sales, you get $90.63 ($1,250 x .0725). But you collected $90.75 (25 x 3.63). Did you cheat the customers? Of course not. I work in the payroll industry. For the 941 report (Quarterly Wage withholding Report) there is a line item for fractional cents to balance the report just for this type of rounding discrepancy.

Then there is the case where maybe a seller deposits his sales tax monthly, but let's say he made an error, and underpaid the tax. The error is discovered when the report is filed, and he pays the balance due. No customer got cheated, the sales were reported correctly when the report was files, It's just that a mistake was made for a deposit. In the same 941 report I mentioned above, there is a place to show the amount deposited, and if it doesn't match what is calculated, there is a place for Amount Due, and another for Amount Refunded.

I have to agree with Ed. This looks like a viable solution. In the event someone overcharges their customer (either intentionally or not), the government would be out of the loop. If it was done intentionally, then the person doing it isn't going to report it anyway. Yes it's cheating, and no I don't condone it. But I fail to see how that pertains to the discussion. And if it was done accidentally, and found out later, I'd expect the seller to contact the customer and return the overcharge. When that's not possible, then it's shown as additional income, and the seller would have to adjust the sales tax return to reflect a higher sales amount. So there is a balance due with the return.

Either way, I fail to see where the system mentioned wouldn't work. I'm not saying it's good or bad, I just can see how it would work.

Good, bad or neutral doesn't really matter - it won't pass it woud require a new federal sales tax and right now that dog ain't gonna hunt.