August 12, 2003

We Collect Taxes for the State; pro bono

Here's something I've been mulling over all day for some reason.

J'ever notice that state sales taxes are added to our subtotals? Y'have?! Good!
If a "sale" is being taxed, shouldn't the merchant be paying it, rather than the customer? Isn't it really a "purchase tax"?

If the transaction itself is being taxed -- rather than specifically the "sale" or the "purchase" -- then shouldn't the tax be split? Let's say your State has a 6% sales tax (as Connecticut does), should the tax be 3% to the customer, and the remaining 3% to be forked over by the merchant?

Now, I know what you're thinking: "But, Sporkster (my granny calls me "Sporkster"), the merchant has to protect his profit margin regardless, and would raise the price of everything in the store to cover the sales tax. The customer pays the whole thing anyway."

Okay, fine; wrap the cost of the tax into the price. It could then at least legitimately be called a "sales tax."

But since the tax is blatantly added -- right in front of him -- to the customer's total, it is obviously, by definition, a "purchase tax" on the customer. This means that every merchant in the State is an agent of the State and being employed by the State as a tax collector!
The merchant isn't paying his own taxes to the State, he's forwarding his customers' taxes!

As a merchant, I would think hard about demanding a salary from the State for collecting my customers' taxes for It.

Posted by Tuning Spork at August 12, 2003 06:49 PM
Comments

Employers have to do the same thing--forward the taxes they take out of your check to the gov't...

Posted by: Susie at August 12, 2003 10:02 PM

Susie, actually, I don't believe there's a requirement upon employeres to collect the government's taxes. I've declared myself "tax exempt" during many pay periods in which I knew that those extra hundreds o'bucks'd be crucial to my paying my way. My employers obligation is to his own business, not mine.

Posted by: Tuning Spork at August 12, 2003 10:22 PM

Spork, Susie's right. The employer has to withhold. How much is another question. Payors of certain types of payments (e.g., dividends and interest) to foreign investors also may be required to withhold and remit taxes to the IRS. Indeed, taxpayers are often required to act as agents for the government. The sales tax is no different. The state is indifferent as to who bears the economic burden of the tax (that's why merchants are free any time they want to declare their own tax holiday - they just have to pay it themselves rather than pass it on to the purchaser).

Posted by: Freedom's Slave at August 18, 2003 06:00 PM

Yo, Slave. But I declared myself tax exempt for the entire year of 1991 with the idea that I'd bank the appropriate amount and earn interest on it. (Of course, it didn't really work out as planned and I ended up having to write a huge check the following April -- I never did THAT again!)

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