Gus West, Chair of the Board of THI notes, “…thanks to a regressive patchwork of state and local taxes, Americans are paying more than they should for their phones and the products they buy online…This unfair tax burden hits hardest those who can least afford it, including many Hispanics.” With a median income ($38,624 in 2011) nearly 23% lower than that of the total population ($50,054), many Hispanics struggle to pay the excessive taxes that are increasingly levied on the sale of digital goods and services. The Report notes that the same is true for others of limited financial means, including many black many families. Yet without internet access and telephone service, families would suffer a severe disadvantage in matters ranging from government and commercial interactions to education and employment opportunities. Thus the Hispanic community’s reliance on digital goods and services leaves them vulnerable to unfair and inconsistent tax policies, because for many, smartphones and other mobile devices are the gateway to full participation in our tech driven society.
“In the past, each jurisdiction established its own policies for levying taxes, and in most cases the consumer paid the rate for the location in which the purchase was made.” For mail orders, the consumer paid the rate established in the location where he or she resided. Today however, digital taxing has become much more complex. The Report offers the following example: A woman from Colorado purchases movie downloads online while sitting in Virginia’s Dulles International Airport, near Washington, DC, from the Apple Store in Texas. This situation illustrates the complexities of digital taxing. Which state has the right to tax the purchase? The customer’s billing address is located in Colorado. However she was physically located in Virginia when the purchase took place. Although, the server that took and fulfilled the order was located in Texas. THI urges, “[a]bsent a uniform framework that would govern taxing authority across the country…it is difficult to answer the questions, or to control the potential for confusion.” Without clarity, THI believes consumers are unfairly held hostage to inconsistent, unrestrained taxing authority.
The Hispanic Institute declares, “the excessive and inconsistent taxes essentially impose financial penalties on Hispanics and other low income consumers which is not only unfair but also bad public policy.” “There is too much at stake,” says West. “Congress must take action to protect Americans from unfair taxes.”