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Sales tax creates more unnecessary pain than value added tax

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Re: Sales tax creates more unnecessary pain than value added tax

#41

Post by gamblor956 »

pionar wrote: post #26
jmole wrote: post #22

Earlier quoted context omitted.

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?

If you're a registered business with a tax ID number, you can deduct sales taxes paid on business inputs (supply) on your income taxes, whether personal or business.

You can in the sense that sales tax paid is part of the cost of acquiring the good resold.

However, you can only deduct items so acquired for business purposes, not for personal purposes.

Re: Sales tax creates more unnecessary pain than value added tax

#42

Post by gamblor956 »

gravitas wrote: post #35
jmole wrote: post #22

Earlier quoted context omitted.

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 believe there is a specific situation in that you must have purchased the goods intending resale (see the other reply explaining raw goods) of a further finished good. Buying something as a consumer, (not) using it then reselling it later is taxable.

It's not enough to purchase the goods intending resale; you must also be registered as a reseller.

In fact, if you can't provide a reseller's certificate (or license, the exact term depends on the state) then the seller generally must collect a sales tax on the sale.

Re: Sales tax creates more unnecessary pain than value added tax

#43

Post by [deleted] »

gowld wrote: post #23
lotsofpulp wrote: post #10

>Without this exception, we’d probably have a crazy economy where manufacterers sell directly to consumers. What is the problem with this?

The original is missing an "only". OP is saying that without the resale exemption, stores would be so tax-inefficient that we'd end up buying everything direct from manufacture. (But it's more likely that stores would operate on a consignment model instead of a resale model.)

[deleted]

Re: Sales tax creates more unnecessary pain than value added tax

#44

Post by Pet_Ant »

Pfhreak wrote: post #21
lotsofpulp wrote: post #10

>Without this exception, we’d probably have a crazy economy where manufacterers sell directly to consumers. What is the problem with this?

Most of us enjoy going to a thing called a "store" where there are usually a variety of options to choose from, where one can easily compare side by side from different manufacturers.

Really? Don’t most of us going into a store, find something, Google reviews, and competitors, and competitors’ reviews and then see if the convenience of being already here outweighs the effort of going somewhere else plus it’s marginal utility increase? Honestly, I’ve shifted a lot of my regular purchases into Amazon subscriptions.

Re: Sales tax creates more unnecessary pain than value added tax

#45

Post by [deleted] »

gowld wrote: post #20
rgbrenner wrote: post #11

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."

[deleted]

Re: Sales tax creates more unnecessary pain than value added tax

#46

Post by chrischen »

mywittyname wrote: post #36
gowld wrote: post #17

Sales tax also cripples the used/resale/refurbish product, making it more locally efficient to buy new instead of used, pushing used goods into the waste stream.

How so? 1) second-hand goods purchased from a non-business are usually tax-free. With the exception of vehicles. You're asked to pay sales tax on these purchases when filing your income tax each year, but in practice, noone does this. 2) I buy used/refurbished tools and furniture pretty frequently. How exactly is the second-hand market being crippled here?

Are you talking specifically about cash transactions? Because ebay collects sales tax now.

Re: Sales tax creates more unnecessary pain than value added tax

#47

Post by megiddo »

rgbrenner wrote: post #11

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…

He also confounds costs with prices.

Costs are not a significant factor in the prices of market goods - that is dominated by supply and demand.

Re: Sales tax creates more unnecessary pain than value added tax

#49

Post by wolco2 »

Pfhreak wrote: post #21
lotsofpulp wrote: post #10

>Without this exception, we’d probably have a crazy economy where manufacterers sell directly to consumers. What is the problem with this?

Most of us enjoy going to a thing called a "store" where there are usually a variety of options to choose from, where one can easily compare side by side from different manufacturers.

I hate going to the store. And a store has only a few brands.. I have to drive around to compare prices.

With covid most of us are online this year.

Re: Sales tax creates more unnecessary pain than value added tax

#50

Post by jedberg »

jmole wrote: post #22
rgbrenner wrote: post #11

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?

When you file your state business taxes, you put down how much state sales tax you paid, and then you get it back as a credit (not a deduction), so you basically get it all back at the end of the year, if you have a resellers license.

Also, some retailers let you file your resellers license with them and then they don't charge you sales tax because they know you are a vendor who is going to resell it. This system is often abused by small businesses who buy personal items along with their business items and then don't pay tax on their personal items. In theory they have to file use tax at the end of the year (the same use tax you're supposed to file if you buy something out of state and aren't taxed on it), but most people don't.

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