I'm not pretending not to know how it works- I'm genuinely baffled as to why you'd owe sales taxes in your local state on something you purchased elsewhere; as in, "Why isn't there a "Duty Free Allowance" for interstate purchases of a personal use nature clause in the tax legislation of the relevant states?"
I mean, if I (as an Australian) travel overseas and purchase a digital camera worth (say) $100, I don't have to pay any taxes or duty on it when I return. But what you're telling me is that if you, as an American, travel to Canada and buy a digital camera for $100, you'll owe sales taxes on that camera when you return home (depending which state you live in), despite it being purchased in a different freaking country.
Surely most people- regardless of which part of the world they're from- can see that's not a particularly reasonable state of affairs, and wonder why it's allowed to continue?
One reason it's been allowed to continue is because until recently it wasn't enforced except on large purchases such as cars ( if I buy a car in NJ and register it in NY, I will have to pay NY sales tax on the car minus a credit for whatever tax I paid in NJ) and obvious fraud. In the last few years, states have begun adding a line on tax returns for use taxes with a small "safe harbor" amount depending on income- I think mine was $75.
Another reason is that although people always talk about use taxes being due on out-of-state purchases, that's not really accurate in my state. Use taxes are due whenever the seller does not collect NYS sales tax or collects sales tax at a rate lower than the rate in the county where the item will be used. This includes purchases of goods made out of state or out of the country, but it also includes
- purchases within the state from nonlicensed vendors - mostly sales by individuals
- purchases on Indian reservations
- services provided within the state by either out-of-state contractors or nonregistered individuals
But probably the most important reason use taxes exist is because no state wants to make it legal for its residents and businesses to avoid state sales taxes and thereby give them more of an incentive to purchase goods and services from out-of-state businesses and lot of residents don't want to give that incentive either.
I don't know how many different taxing jurisdictions you have in Australia, but I can get to six different states and a few Indian reservations within a few hours and if it wasn't for the use taxes, I could probably legally avoid paying sales tax on most items- for example, if I buy furniture in Massachusetts to be delivered to NY, I will not be charged the Massachusetts sales tax and unless the company has a location in NY, I won't be charged NY taxes either. Different jurisdictions tax different items ( for example clothing may not be taxed) and I've heard that some jurisdictions exempt out-of-state residents from any sales taxes. My state doesn't want me to be able to do that, and neither do the in-state stores who are obligated to collect the tax and mainly employ state residents. At the moment, there are some number of people who don't do this because it's not worth the risk- eliminate the risk and more will do it.
I have to say, though, a certain amount of what sort of taxes you think are reasonable has to do with what you are used to. Income tax, real property tax and sales and use tax all seem reasonable to me but the idea of personal property taxes makes my head spin.
