On March 30, I hammered Democrats on the issue of Internet sales tax. I asked, “Where’s the store?”
Last week Republicans came out of their hidey-hole on this issue and they are just as bad.
National Republicans are standing against sales taxes on Internet purchases. The question for them is “Where’s the government?”
Republicans believe in local government. Most governors are Republicans. So are the mayors of many big cities, including New York and Los Angeles. Sales taxes are the fuel states and cities run on.
If Internet sales taxes are wrong (and I think they are) we either find some way to replace them or it’s the states that suffer. Among the states that would suffer most, by the way, is Texas, which gets over 40 percent of its revenue from sales tax. Their Governor wants to lead our nation. We should demand an answer first from him.
Conservatives love sales tax. Many consider it more “fair” than income tax or property tax, because it’s imposed when you’re closer to the government’s services.
But sales tax is also our most regressive tax. If you’re rich and invest your money you don’t pay. If you’re poor and spend your money you’re hammered. Add in the “digital divide” (the rich spend more online than the poor) and it gets worse. Order benefits the rich most. Yet the poor pay for it.
An honest answer is to find another way to fund local government. Following are a few ideas, all of them nasty:
- Value Added Tax. Very popular in Europe, it’s imposed at each step in the value chain at the factory, the distributor, and the store. With VAT even writers (like me) have to submit papers and payments each month and become agents of the government. (You’d like that, wouldn’t you?)
- Gas or Utility Taxes. Everyone needs gasoline, electricity, oil and natural gas. These goods have a relative handful of sellers responsible for charges and payments. Higher taxes are an incentive to conservation.
- Business Taxes. You can register every business and tax it based on revenue, or head count, or any other measure. Yes, virtual businesses would likely gravitate to where these taxes are lowest.
- Lotteries. A lottery is a tax on people who are bad at math. That’s why I like them. If we could find a way to tax people who are bad at English, science and history I’d be a happy camper.
All these schemes have flaws. So would any scheme you came up with. The fact is no one likes government and no one likes taxes. But when we have kids we need teachers. When we’re mugged we need cops. Their salaries come from taxes, and right now they come from sales tax.
The man I blame for this mess is currently parading about as our best buddy Governor James Gilmore of Virginia. By failing to seriously address these questions on his own commission by pandering to us in other words he gave us this mess.
It might be good to have a new commission, one without politicians on it. It might be better if leaders dealt straight with us. It would be best if we in e-commerce came up with our own honest answers.