Junto Boys

WEB TAX

States hate the Internet. They blame E commerce for millions in lost sales tax revenue, and they want to fix the problem by collecting taxes on Internet items bought by their residents.

But why did states start a sales tax in the first place? They justified sales tax because brick and mortar stores need roads, police protection, government bureaus, state commerce regulators and still other services that burden taxpayers. But if the Internet is resulting in less local commerce it would follow that states have the potential to save a lot of money. Only, as you know, states are never in the business of reducing their size if they can help it.

What this question has exposed is that the states levy taxes using a convenient justification and then spend the money however they want bloating their state budgets. As soon as something in the paradigm changes, their pet projects begin to feel the pinch.

The state of Florida use to do business in a single building less than 50 years ago, but now they have fifty odd buildings providing who knows what. They fund a bunch of fluff that make politicians feel important, compassionate and powerful.

I rarely think the Federal government should trump state government, but interfering with interstate commerce is ample reason.

The commerce is occurring where the seller resides, not the buyer. The sale happens the moment the credit card is charged, not the moment the package arrives. States are trying to make money from commerce that is happening outside of their jurisdiction.

Also, by taxing the Internet, state A can control the prices of items in state B. That's overstepping boundaries. Operationally, that gives states the power of levying a sort of tariff on goods from elsewhere. Eventually a state could ruin Internet commerce by making the online price higher than what the same item could be purchased for locally. You'd have, in effect, a trade war between the fifty states. We'd have free trade with Mexico but limited trade with New York.

The states should be welcoming Internet commerce, because their residents are enjoying a higher standard of living. Could it be possible that the people who run the government would rather have more agencies than a better quality of life for the people they "represent"? That would be cynical.