Don't Mess With Taxes

Earlier on this July 4th, the issue of taxation and representation was broached in connection with levies on fireworks purchases.

It also came up after the change on July 1 of Washington state's tax system from origin-based to destination-based for shipped goods. That means that taxes now will be collected based on the location of the buyer, not the location of the seller.

The change was made, say Washington officials, because Evergreen State brick-and-mortar retailers that collect the state's sales tax are losing business to out-of-state retailers that don’t charge buyers the tax.

As you might suspect, many Washington residents aren't happy, specifically those who have previously avoided paying sales tax by ordering items online.

Sales taxes and the U.S. Constitution: Following the change, Seattle Post-Intelligencer reporter Andrea James, who wrote about the tax-law change, got a lot of reader questions. One of them is frequently asked by shoppers -- and taxpayers -- nationwide:

Isn't it illegal under the U.S. Constitution to tax interstate commerce?

"This is something that a lot of people believe -- I'd heard this before in casual conversation and accepted it to be true," writes James in her blog about online business, Andrea on Amazon.com. "It turns out, it's a myth."

James goes on to explain that while the Constitution gives Congress the right "to regulate commerce with foreign nations, and among the several states, and with the Indian Tribes," it also says that, "no tax or duty shall be laid on articles exported from any state."

That clause, James notes, does not mean that states can't tax the goods that you buy from another state. It just means that Congress can not.

Read the rest of her very thorough explanation here.