Wednesday, May 8, 2013

The Un-American Moral Premise Behind the Drive to Tax Internet Sales

In Time for Online Sellers to Collect Sales Taxes, the NJ Star-Ledger editorialized:

The U.S. Senate is advancing a bill that would require internet-only and catalog businesses to collect sales tax from out-of-state customers. It’s aptly named the Marketplace Fairness Act, and it’s long overdue.

There is a fairness issue involved, but that isn't the editors' main concern:

The current system deprives state and local budgets from a much-needed infusion of cash. By one estimate, state and local governments lose out on $23 billion in revenue annually because of untaxed online transactions.

I left the following comments:

The idea that "governments lose out on $23 billion in revenue" hides a virulently un-American, statist premise; that the government has an inherent claim on people's wealth, and that any untaxed money people keep is by government permission only. 

This is a moral inversion. The money individuals earn is theirs by inalienable right. It is not owned by government, which was Founded as the individual's servant and rights-protector. Therefor, government isn't losing anything by not taxing something, because it can't lose what it doesn't own to begin with.

Another example of the editors' statist/collectivist worldview is the comment "We’re well-positioned to collect our due under the proposed law." We the people, as individuals, will actually be paying out more. By "we're" and "our" the editors mean the government, which will be collecting--and redistributing the money to the most politically connected. But statists don't much concern themselves with actual individuals. Individualism runs counter to statism. That's why they always speak in collectivist terms to justify expanded government.

That said, there is a fairness issue involved. Taxing store sales while exempting online sales violates store retailers' rights by violating the principle of equality before the law.  One way to fix the fairness problem in the short term is to apply sales taxes to the internet while simultaneously lowering the sales tax rate to a point that is revenue-neutral to the government (which should focus on cutting spending, not increasing taxes). The last thing that should be done is to increase the amount of money the government seizes. And since the politicians can't be trusted to not sneak the rates back up later, some ironclad statutory method should be included to prevent that.

Longer term, the sales tax should be phased out and abolished. As to those roads, bridges, ports, and airports, they should be funded through user fees only, not generalized redistributive taxation (which is also un-American and probably unconstitutional). 

I should clarify that I do not believe we should fight for a lower sales tax in exchange for taxing the internet as any kind of compromise or primary goal. My point is that in a worse case scenario, a lower sales tax may be the only short-term option to fight for if the Marketplace Fairness Act passes and if the extension of the sales tax can not be stopped in the state one lives in. 

My activism in newspaper forums is sometimes rushed, and consequently can leave an erroneous implication. A clearer statement of my position is laid out in The Objective Standard blog. 

Related Reading:

Stop the "Marketplace Fairness Act"

Whose Money is it, Anyway?

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