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

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amazon.com
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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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  • StenWilson

    Richard,

    Could you please publish an article of what the world would like without sales tax. For instance, lets level the playing field for local and internet merchants by eliminating sales tax all together. That is what you are essentially suggesting. Doing so compels state legislators to redo existing tax policies but with one less tool in their bag. Over the past decade many states have been forced to increase their income, property and sales taxes to compensate for the increasing amount of evaded sales taxes enabled by Internet commerce.

    So your proposal is for every state to increase or create income taxes, increase property taxes and eliminate sales taxes. For the millions of Americans you seem to be so concerned about that sounds like a pretty bad deal. Middle class consumers will loose even a larger portion of their paychecks leaving less disposable income in the economy. Sales and use taxes permit a consumer to pay tax when they decide to and have the money to contribute. Compelling state legislators to create more harmful mandatory taxes leaving less for middle class families is exactly the wrong tax policy decision.

    FYI: Today the millions consumers with access to the Internet and necessary credit continue to evade taxes on Internet purchases while their less fortunate constituents continue to pay mandatory higher taxes at local registers.

    A sale is a sale. Whether made online or locally the goods sold should be taxed the same way. Modern technologies easily enable any Internet merchant to process CC cards and provide real time shipping, and now those same technologies seamlessly enable automated sales tax calculations, collections and remittances.

    The only question left is do Americans desire to maintain sales tax for all purchases equally and fairly or eliminate them in favor of higher mandatory income and property taxes. If an individual consumes less he or she should pay less tax, that’s fair.

    • RGZ_50

      Sorry Stan, your attempt to reframe the issue is clever but doesn’t work. States around the country have tapped every conceivable source of revenue in their relentless drive to take more and more of the productive citizen’s earnings. They bank on the fact that people like Stan will happily give blood until it hurts.

      Now they have painted themselves into a corner with absurdly generous pension obligations that are unsustainable and they are looking to consumers for another bailout.

      Hopefully there are less Stans and more Richards. More Richards saying to obese government at all levels, back away from the buffet line and get on a weight loss program. It’s called tough love.

      • StenWilson

        No reframe, just the facts. everyone is quick to jump on the NO bandwagon I would love to here your proposed alternatives. Congress just had a hearing and concluded that no viable alternatives were presented by your fearless leaders. So I would really like to know what your plan is too restore equity, fairness and opportunity to the marketplace. No is simple, that is not a solution.

      • StenWilson

        So your solution is to do nothing?

  • jea

    If online adds taxes and shipping & handling, I will just go to a building store where I only pay taxes. Not worth it to me to shop online if they add taxes and shipping & handling!

    • StenWilson

      Sales tax and shipping charges are two very different topics. Please tell me you understand the difference? Do you actually go to your local elections voting for increases in infrastructure, education and special services funding and expect “shipping and handling charges” to pay for them?

      • Jea

        Yes I know the difference. What I am saying is that it would cost me more to buy online with s&h and taxes. We should have a fair tax and get rid of all the other taxes!

        • LadyWolf

          Jea…I understood what you meant from your previous post. Only a dimwit wouldn’t understand it.

        • StenWilson

          Lets phrase it another way. Your response indirectly brings us to the point that Internet merchants claim automating sales tax to be too burdensome in an effort to maintain that average 6% price advantage. There is no reason why Internet merchants should be exempt from processing sales taxes. They will have find a way to compete fairly.

          Did you know that Internet retailers benefitting from modern technologies successfully market and sell $1MM of merchandise with only .8 employees when compared to brick and mortar who employ 3.8 employees to sell the amount. In other words Internet merchants can easily restructure their prices without a 6% subsidy from all of us.

          Mandatory property and income taxes have been increasing over the past decade to compensate for increasing levels of evaded sales taxes on Internet purchases. The same modern technologies easily eliminate any sales tax compliance burdens. States’ legislators have also passed legislation to lower existing taxes in favor of being granted to collect existing sales tax due on all Internet purchases.

          Just because an Internet merchant does not collect the tax does not mean consumers are exempt from paying it. In all 46 states with sales and use tax policies in place residents are already legally required to self track and remit sales tax on all out of state Internet purchases. Failure to do so is commonly known as “Tax Evasion.” Remember how Al Capone was finally sent to jail…. tax evasion.

          • Internet Sales Tax

            In MN, NJ, TX, NY, NE and a few other states you can stop in at a brick and mortar store and buy an item (maybe a gift for your mom who lives in another state). The brick and mortar store does not have to charge you the sales tax if they ship the gift out-of-state for you. Maybe you sent your mom a gift that she hated. Is she now responsible to pay the “use tax” on a gift you gave her in her state? The Marketplace Fairness Act is a tax increase and new tax on the person giving the gift. It is a new tax on a Christmas gift. It is a Grinch tax. Sten are you a Grinch?

          • Kevin Smith

            The IRS is already targetting all conservatives so its already war

  • Bill Jensen

    Welll helllo Sten back at it again to anyone here just to let you StenWilson is a MFA hack that love to pop up and tell you all how much he love collecting sales taxs with fedtax just say bye bye Sten but before you run off agan Sten explain how their are yes States the do not collect sales taxes – Suprize – seem that some States if the wanted to could do away with this unfair tax.