Inter-State Business Tax Bill Goes Through House Committee

The United States House Judiciary Committee approved legislation which aims to simplify the collection of business taxes across state lines.

The Business Activity Tax Simplification Act was designed to resolve the issue of states seeking to collect business activity taxes from businesses located in other states. The act sets specific guidelines for when an out-of-state business can be charged a tax for business done within another state.

Many states have recently sought to collect business activity taxes from businesses in other states. The problem has been that different states use different standards for determining what justifies taxation.

The bill's sponsor, Rep. Bob Goodlatte (R-VA), explains that the differences between states has resulted in businesses being deterred from expansion into other states for fear of taxation. The issue is of specific concern for internet-based companies.

"This legislation sets specific guidelines for when an out-of-state business may be charged a tax for doing business in a state," Goodlatte said. "This legislation focuses on allowing the Internet and the commerce that it facilitates to expand, by eliminating excessive taxes that harm on-line growth."

The bill creates a "bright line" test to determine whether or not an out-of-state business is obligated to pay taxes to another jurisdiction. There would also be a physical presence test established. For example, a state may only tax an out-of-state business if the out-of-state business has a physical presence in the taxing state.

This physical presence could be defined as leasing or owning real or tangible property in the state or the assignment of one or more employees in the state for over 21 days.

The bill should be voted upon by the House by the end of summer.

How Much Interest Do I Pay On A Car Loan?

The length of the average car loan depends on the term of the loan. According to buyingadvise.com, 45 percent of Americans are financing cars for 5 years. This means that you would pay 60 payments during the average car loan.

Furthermore, buyingadvise.com states that the average American gets a new car every 5.5 years. Using these statistics to calculate this, most Americans only go without a car payment for 6 months each 6 years. The reason that most people do this is to stretch out the loan making the monthly car payments lower.

When buying a car, the car buyer should take into consideration the total amount paid for the car versus the monthly payments alone. This could save a lot of money over the term of the loan.

You and the dealership you are working with determine the amount of payments you make over the life of your loan. There are terms anywhere from 12 months to 84 months. It is a wise decision to do your homework before going to the dealership to purchase your next car. The shorter your can loan the quicker you can pay off your car which will save you interest and give you more months without a car payment.

Fortunately, there are many websites out there that contain calculators for you to figure the difference between a 36-month and a 60-month loan term. Go and Google "car loan calculator" and find a website with a calculator that will figure your monthly payments for you. All you need to do is put in the numbers.

Let me show you an example that demonstrates this difference. If you take a loan for a new car for $21,325.00 making 36 payments (3 years) and paying 5 percent interest you will pay $639.13 per month and pay $1,683.66 in interest. Using that same amount of $21,325.00 at 5 percent interest for 60 payments (5 years) you will pay $402.43 per month and pay $2,820.74 in interest. You end up paying $1,137.08 more in interest because of the longer term.

So in this example you can see how even though the monthly payments may be higher for the short term car loan versus the average car loan term of 60 months, you will pay more in interest over the life of the loan. Yes it will cost you more per month for your car but the savings can be well worth the extra payments each month. If you find yourself looking at a car that you must finance for over 60 months just to be able to afford the car payment; then look for a less expensive car that fits your budget.

The next pit-fall to longer term loans has to do with the car's depreciation. If you finance the average car loan over 60 -72 months, you risk the possibility that you will be upside down on the auto loan when you go to trade your car in. Being upside down is when you owe more on the balance of the loan than the car is worth in value. This happens because the car is depreciating faster than you are paying it off with a long-term loan.