The Internet Sales Tax Push

Posted: April 22, 2013 by ShortTimer in Economic freedom, Economics, free markets, Regulation, Senate, Tax, taxes
Tags: ,

From WSJ:

Every time Congress has taken a serious look at proposals to boost Internet sales taxes, it has rejected them. That’s probably why pro-tax Senators are trying to rush through an online tax hike with as little consideration as possible.

As early as Monday, the Senate will vote on a bill that was introduced only last Tuesday. The text of this legislation, which would fundamentally change interstate commerce, only became available on the Library of Congress website over the weekend. And you thought ObamaCare was jammed through Nancy Pelosi‘s Democratic House in a hurry.

You should always worry about measures that are rushed through, and you should always worry about taxes.  Time to call and email those senators again.

For Senators curious about what they’re voting on, it is the same flawed proposal that Mike Enzi (R., Wyo.) introduced in February. It has been repackaged to qualify for a Senate rule that allows Majority Leader Harry Reid to bypass committee debate and bring it straight to the floor.

Yup, rushing it through, no committee debate, no discussion, no time for input.

Mr. Enzi’s Marketplace Fairness Act discriminates against Internet-based businesses by imposing burdens that it does not apply to brick-and-mortar companies.

Almost every bill these days has an Orwellian name.  There is nothing “fair” about this act.

For the first time, online merchants would be forced to collect sales taxes for all of America’s estimated 9,600 state and local taxing authorities.

New Hampshire, for example, has no sales tax, but a Granite State Web merchant would be forced to collect and remit sales taxes to all the governments that do. Small online sellers will therefore have to comply with tax laws created by distant governments in which they have no representation, and in places where they consume no local services.

Meanwhile, New Hampshire’s brick-and-mortar retailers will bear no such burden. They will not be required to collect taxes on the many customers who drive across the Maine and Massachusetts borders to shop in New Hampshire. Bill sponsors say it would be too big a hassle to force traditional retailers to ask every walk-in customer where they live, but these Senators are happy to impose new obligations online.

What this does is it creates barriers to competition for the online marketplace.  It’s cronyism – the physical stores are having government be their thug enforcer.

Right now, internet companies have the advantage of reduced taxes, and they have a broad customer base, as they have access to any customer with internet access.  Brick-and-mortar stores have the advantage of specific taxes (no use tax), no shipping charges, and they allow customers to actually see what they’re buying before they purchase it.

Brick-and-mortar stores have the added cost of maintaining a store; but only suffer online disadvantages if they don’t expand their business online.  Some online businesses have already dominated certain markets, but with the viability of searches and search engines that will help the consumer seek out the best price, all they have to do is offer the best product at the lowest price.  That’s capitalism.

What the brick-and-mortar stores want now is to force their online competitors to suffer the myriad of regulations that exist throughout the nation.  Making a medium-sized online business (something like OpticsPlanet, for example) know every state, city, township, county, municipality and local district’s tax status might be possible, but it will drive their prices up as they hire lawyers.  Making a little business comply with the same regulations is an exercise in using government to destroy competition.

It’s noteworthy that Walmart and Amazon are supporting this bill.  While a lot of times I’m willing to voice support for Walmart, that’s when they recognize that their best interests and their customers’ interests coincide and follow their customers’ demands.

In general, that’s the case, because Walmart usually exemplifies free markets.  In this particular instance, however, Walmart has looked at its balance sheet and decided that it’s in its best interest to use government force to crush its competitors.  Walmart does provide a lot of good for its customers, but ultimately Walmart is only a creature as moral as the system it exists in.  When it recognizes the demands of customers and represents them, it does well and is as moral as its customers who drive it; when Walmart exploits the governmental system that lets it collude with the IRS to destroy competitors, it’s as villainous as the vampiric politicians who enable it.

Any Internet seller with more than $1 million in annual sales would be forced to serve all of the nation’s tax collectors.

Note that says “$1 million in annual sales”.  That doesn’t mean $1 million in profit.  A company could barely be breaking even after expenses and find itself destroyed by the taxation burden and regulations it now has to wade through.  The red tape would be monstrous.

This bill, and all federal bills like it also tax citizens in addition to state-based use taxes.  The citizen is already hit for taxes if they buy things out of state when they do their end-of-year state taxes (there’s often a “minimum use tax” whether or not you bought anything online), and now they’ll be hit for taxes from the business.  This is a federal bill to make you pay more taxes for products, taxes which most every state is already assessing you for.

This rush to tax is an attempt to overturn the Supreme Court’s 1992 decision in Quill v. North Dakota that forcing businesses to collect and remit taxes to jurisdictions where they have no physical presence was too big a burden.

Noteworthy from Quill v North Dakota:

In Quill Corp. v. North Dakota, the Supreme Court ruled that a business must have a physical presence in a state for that state to require it to collect sales taxes. However, the court explicitly stated that Congress can overrule the decision through legislation.

The power to tax is again the power to destroy.

The WSJ piece ends with this:

Some of our conservative friends are backing this Internet tax raid as a way to raise revenue to avoid more state income-tax increases. More likely the new revenues will merely fund larger government.

They aren’t conservatives.  They’re RINOs.  Raising taxes reduces the benefits for producers, and increases the demands on consumers.  People will make less money per unit, so they will make fewer units; people will pay more per unit, so they will buy fewer units.  Volume will decline, consumers will suffer, and all but the chosen winner businesses and the redistributor politicians will suffer.  “Revenues”, a polite way to say government taking from you (while giving you nothing that you need), will not be increased.  It will simply fund more pet projects of worthless “representatives” who will seek to bring home pork barrel projects to get themselves reelected.  This is Bastiat’s example of everyone plundering everyone.

If you want to steal from the people of the US in order to line your filthy thieving nest with taxes that destroy businesses, this is one way to do it.  If you’re a scum-sucking almost-obsolescent whip-and-buggy maker who wants to make sure no one can be more successful than you and that their businesses are destroyed so you can feast on their carcasses, this is a great tool to use government force to destroy their success because you’re too lazy to earn it yourself; all the while screwing over your customers because you’re too weak to make an honest buck.

It’s forcible redistribution, government finding the winners and crushing them at the behest of the losers and subsidizing the losers that harm the consumer.

And they call it “fairness”.

Comments
  1. genomega1 says:

    Reblogged this on News You May Have Missed and commented:
    The Internet Sales Tax Push

  2. sally1137 says:

    Reblogged this on Tin Foil Hat Book Club.

  3. Gunny G says:

    Reblogged this on AMERICAN BLOGGER: GUNNY.G ~ WEBLOG.EMAIL and commented:
    GyG !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  4. Robert Wyatt says:

    I used to believe that “a democrat never met a tax he/she didn’t like”. I now believe that that comment now applies to republicans as well…………

  5. […] We’ve talked about the push for an internet sales tax before, and some effects it’s goin….  And now we’re seeing some more of those effects: […]

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