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>Without this exception, we’d probably have a crazy economy where manufacterers sell directly to consumers. What is the problem with this?
I'm going to take a wild guess and say the author isn't from the US. He includes sales tax on items purchased for resale.... which is an exception in every state that I know of. Even if you purchase an item at retail with sales tax, you can file to receive the money back from the state. Additionally sales tax has nothing to do with whether your supply chain is fully integrated, and hiring all of your suppliers as emp…
So if I buy something, then sell it later, that first purchase should be considered a "resale" purchase, right?
>Without this exception, we’d probably have a crazy economy where manufacterers sell directly to consumers. What is the problem with this?
(But it's more likely that stores would operate on a consignment model instead of a resale model.)
I'm going to take a wild guess and say the author isn't from the US. He includes sales tax on items purchased for resale.... which is an exception in every state that I know of. Even if you purchase an item at retail with sales tax, you can file to receive the money back from the state. Additionally sales tax has nothing to do with whether your supply chain is fully integrated, and hiring all of your suppliers as emp…
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>Without this exception, we’d probably have a crazy economy where manufacterers sell directly to consumers. What is the problem with this?
Limiting retail would therefore decrease global efficiency, going against the principle that taxes should not incentivise inefficient behaviours.
I'm going to take a wild guess and say the author isn't from the US. He includes sales tax on items purchased for resale.... which is an exception in every state that I know of. Even if you purchase an item at retail with sales tax, you can file to receive the money back from the state. Additionally sales tax has nothing to do with whether your supply chain is fully integrated, and hiring all of your suppliers as emp…
Where can you file for sales tax reimbursement? Essentially all online resale sites (eBay, Reverb, etc.) are charging sales tax on secondhand goods. So if I buy something, then sell it later, that first purchase should be considered a "resale" purchase, right?
I'm going to take a wild guess and say the author isn't from the US. He includes sales tax on items purchased for resale.... which is an exception in every state that I know of. Even if you purchase an item at retail with sales tax, you can file to receive the money back from the state. Additionally sales tax has nothing to do with whether your supply chain is fully integrated, and hiring all of your suppliers as emp…
> What he also misses: is that if I sell something to another retailer for resale , I don't charge him sales tax on the entire purchase. This is covered in the article: "a retailer usually won’t pay sales tax on a manufactured good they intend to a consumer in the same form."
For a really clear example of this, many states have a sales tax exception for equipment that will manufacture goods for resale. So in that case, the equipment never even made it into the final product, except by touching the item that was sold. Equipment has a lifetime, and it's consumed by producing items for resale... so it's exempt.
If I purchase raw material to turn into a final product, that raw material is sales tax exempt.
Having previously lived in a state with no sales tax whatsoever, I'm not really sure how common this scheme is across states, but given said national marketplaces that require an NTTC as a condition of entry I'm guessing exceptions where such an item doesn't exist are fairly rare (although other states do call them by other names, I have once or twice obtained a similar form from a neighboring state which required such a document for out-of-state purchasers).
So I guess I'm not sure that this author really understands the reality of sales tax in the US - if sales tax really was imposed on every step of the supply chain it would be a huge issue, but it seems that the general principal is that sales tax should only be imposed on sale to the final user.
Of course my state doesn't actually have a sales tax either but instead a gross receipts tax. While technically a tax on the business and not the transaction, the GRT is conventionally passed on to the customer just like a sales tax, so the two are fairly equivalent for typical transactions. Oddly some websites specifically mention New Mexico as a state in which the GRT is not charged to the customer, indicating that the author has never purchased anything in New Mexico...
I'm going to take a wild guess and say the author isn't from the US. He includes sales tax on items purchased for resale.... which is an exception in every state that I know of. Even if you purchase an item at retail with sales tax, you can file to receive the money back from the state. Additionally sales tax has nothing to do with whether your supply chain is fully integrated, and hiring all of your suppliers as emp…
Earlier quoted context omitted.
> What he also misses: is that if I sell something to another retailer for resale , I don't charge him sales tax on the entire purchase. This is covered in the article: "a retailer usually won’t pay sales tax on a manufactured good they intend to a consumer in the same form."
It doesnt have to be in the same form. It just needs to be an input into the product that will eventually be sold to a consumer, where the sales tax will be charged. For a really clear example of this, many states have a sales tax exception for equipment that will manufacture goods for resale. So in that case, the equipment never even made it into the final product, except by touching the item that was sold. Equipmen…
Even then it can be exempt or removed by other items in the tax code. That profit is not part of the sales tax system. It is part of the income tax system.