Quote:
Originally Posted by HarryT
For that very reason, it seems daft to me not to tax at source.
|
In the US, sales taxes are collected at the time of sale. However, due to the
commerce clause, States cannot levy taxes on goods from other States. That's the loophole Amazon employs to avoid collecting millions in sales taxes.
Nonetheless, sales taxes as all single-phase taxes, are particularly weak against such tax avoidance schemes. Besides, the incentive to under-report tax liabilities is that much greater (since one merchant bears the burden of collecting the tax, and the retail level - and the customer will also benefit from the tax avoidance).
Value-added taxes (VAT), on the other hand, are self-enforcing. Since it's collected at every step of the supply chain, each buyer needs receipts with the actual price paid for the goods (as it is used in the value-added calculation), thus increasing compliance (the buyer demands accurate receipts, in order to reduce his own tax liability down the chain).