Internet Tax Mandate: Taxing the online middleclass buyer, but calling it fair

Internet Tax Mandate: Taxing the online middleclass buyer, but calling it fair

WASHINGTON, March 19, 2014 – Do you believe everyday working Americans are undertaxed?  If you do, you should support the so-called ‘Marketplace Fairness Act’ and bid your member of Congress support it also.  

However, if you perceive that government is bloated, wasteful and downright menacing to the freedom and security of its citizens, as 72 percent of your fellow Americans surveyed by Gallup do, then it is vitally important that you tell Congress no, and in the most certain of terms.

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There is much discussion underway about jobs and the economy. Unless you are experiencing the wealth effect of being connected to the umbilical cord of the Federal and State government, you are well aware that the recovery being touted by the corporate mass media is a jobless recovery.

It’s the cruelest of jokes.

And at the very point in time when government should be taking the muzzle off from the oxen of potential real growth in the economy, they are plotting amongst themselves to make the patient even weaker and more anemic.

If the prospect of raising the minimum wage seems counter-intuitive as far as employment is concerned, yet another tax on small and medium sized businesses should appear to be the height of insanity.

Ron Paul calls the ‘Marketplace Fairness Act’ by it’s true descriptive name – “The National Internet Tax Mandate.” He describes the illegitimacy of it in these terms:

Raising prices on goods purchased over the Internet will also impose an additional hardship on American consumers, many of whom are already struggling because of the troubled economy.

Giving ravenous state governments new authority to tax sales made by out-of-state businesses practically guarantees future sales tax hikes, as the arguments will be made that most of the increases will fall on out-of-state businesses.  These businesses will lack effective ability to oppose the tax increases, which is a form of taxation without representation.

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He’s right.  If you think only the businesses subject to the law are going to get hit with the tax, you couldn’t be more mistaken. The effect will be that prices will rise and to the extent that the affected businesses cannot sustain all the additional burden of the tax and the accounting nightmare they create, existing jobs will be sacrificed and the prospect of new employment will be severely dampened.

As a matter of principal, this tax is an unconstitutional over reach by Washington politicians.  The Commerce Clause of the Constitution does not provide for the national government levying taxes on interstate commerce.  As a matter of fact, and as Mr. Paul correctly notes, the Commerce Clause was intended to facilitate free trade by giving the federal government limited power to ensure state governments did not impose taxes and regulations on out-of-state businesses.

The Supreme Court has seen this breach before and ruled it unlawful.  In 1992, in Quill v. North Dakota, the court rendered the verdict, consistent previous court decisions beginning with National Bellas Hess v. Illinois   –  that only where a business has a physical presence in a state, can it be subject to state sales tax.  This means that as affairs stand now, the Internet, with a few narrow exceptions, is a tax exempt zone.

We need more tax free zones, not less.

Don’t be bamboozled or conned into thinking that the provision for exempting businesses with gross receipts under $1 million dollars will be a permanent firewall.  The reason they included that proposal was to perpetrate a divide and conquer tactic.  People have a notion that “well, it does look like they are letting the little guy off the hook, so how bad can it be”.  That’s the perception intended.

The reality is that most of the legislation of this type is just an initial salvo, the camel’s nose under the tent.  You can bank on the fact that once these wasteful and indulgent state governments taste the blood in the water from mid-sized businesses, they’ll lobby for a revision that includes every business – all the way down to you folks who sell a couple of odds and ends on eBay for a little supplemental family income.

Governments find most success in stealing your freedom and confiscating your money by the strategy of incrementalism.  The theory is don’t turn the heat up suddenly or the frog hops out of the water.

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When it comes to income taxes or sales taxes, lawmakers realize that the wealthy and the larger business concerns are not where the big money is.  The real potential for more revenue is in the middle of the economy and the social strata.  Correspondingly, the most potential for opposition to yet more confiscation of private property and earnings, are those businesses and wage earners in the middle.

So, rather than move precipitously, the game is death by a thousand cuts.  One is reminded of Obama’s maxim of  not ‘making any sudden moves’.  It appears that he’s tossed that out the window, but it is still standard operating procedure for most other politicians.

State governments as well as our national government, refuse to behave responsibly and to trim back.  That is why, when they look at you they see not persons, not individuals, not human potential – instead they see dollar signs.

If we can’t immediately tame the beast of runaway government, can we at least agree to stop handing it a meal ticket to the all you can eat buffet?

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