Wednesday, May 08, 2013

Internet Sales Tax

On Monday the U.S. Senate passed the Marketplace Fairness Act which will require all online retailers to collect sales taxes for the states where they ship goods. The legislation still needs to pass the Republican-controlled House before it can become a law. White House spokesman Jay Carney has said that President Obama supports the bill.

I cannot help but note how Congress uses an almost "Newspeak" language to describe their bills (my favorite is the Affordable Care Act which has and will continue to raise healthcare costs). What is fair about burdening the American consumer with higher costs for goods and services? What is fair about making American businesses less competitive?

Instead of having the government limit competition, the "bricks and mortar stores" should be using the Internet to compete in a global economy without the hindrance of government taxes and regulation. They should be pressuring politicians to reduce sales taxes, not increase them. By the way, there are five states that have no statewide sales tax: Alaska, Delaware, Montana, New Hampshire and Oregon. How are they able to operate successfully?

I understand that the States need revenue to provide basic services but unfortunately, like all forms of government, the States are spending/wasting money in areas that they should not be in (click here for examples). This brings me to the crux of the problem: Politicians are not interested in fairness but only in money and staying in office. This Act is expected to bring in an additional $23 billion in revenue - that's an additional $23 billion out of the taxpayers pocket!

If all of that money went to essential services, that would be great. But it will not. The government will first take out what I call "shipping and handling charges", the cost to run an ever growing bureaucracy. Then a significant portion will go to special interest groups that donate time and money to the politicians and their parties (for some great examples, read the book "Shadowbosses" by Mallory & Elizabeth Factor). If there is anything left, then it may go to benefit the people who footed the bill.

In summary, I recognize that some government is necessary for any society to exist but without the "profit incentive" that we have in private enterprise, government continues to grow like a cancer and along with it the potential for abuse. The only way I can foresee that we can limit government is to limit its revenue and that means reducing taxes.

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