Don't Tax Internet Purchases
March 9, 2010 10:37 AM
Colorado last week joined a growing list of states that are expanding Internet sales tax collection. North Carolina and Rhode Island last year passed similar laws. We sympathize with the need of many states to raise money in this troubled economy, but state lawmakers have no business promoting the collection of a tax so widely disliked by their constituents. According to a Parade Magazine reader survey, 85% of consumers oppose sales taxes on Internet sales. Not that consumers are big fans of new taxes, but surveys show consumers are much less opposed to other types of taxes if necessary to plug budget gaps. By substantial margins they prefer alternatives such as higher sin taxes, income surtaxes on the wealthy, etc. to address budget shortfalls. In addition, taxes on alcohol and tobacco tend to discourage behavior that is very costly to society, and U.S. taxes on the wealthy, thanks to a series of tax cuts over the last half century, are among the lowest among the developed countries.
Sales tax collection on Internet purchases should not be expanded. It
should be repealed. More and more consumers have their yard sales on
Amazon, EBay, and Craig's list. If we apply sales tax to virtual garage
sales, the next logical step will be to require that consumers collect
sales taxes on real garage sales. Other consumers, including those
pinched by the economy and low income consumers, are saving substantial
amounts of money by purchasing second hand and heavily discounted items
on the Internet, so Internet sales taxes discriminates against lower
income consumers..
E-commerce helps the environment in several ways. Odd items (and sometimes really, really odd items) that might otherwise end up in a landfill, find a home with a consumer in another state who always wanted one of those. E-commerce also saves a lot of gas and wear and tear on our transportation infrastructure, and reduces traffic jams. Instead of individually driving their vehicles to the mall, the UPS or FedEx trucks, or your postal carrier can drop off your purchases, and they go down your street every day anyway.
An e-commerce state sales tax exemption would be consistent with other sales tax exemptions for worthy purposes (back to school sales tax holidays, sales tax exemptions on prescription drugs, etc.). State legislators should consider the wishes of their constituents and repeal sales tax collections on Internet purchases. They should pursue alternative sources of revenue more palatable to their constituents if the state needs additional funds.
E-commerce helps the environment in several ways. Odd items (and sometimes really, really odd items) that might otherwise end up in a landfill, find a home with a consumer in another state who always wanted one of those. E-commerce also saves a lot of gas and wear and tear on our transportation infrastructure, and reduces traffic jams. Instead of individually driving their vehicles to the mall, the UPS or FedEx trucks, or your postal carrier can drop off your purchases, and they go down your street every day anyway.
An e-commerce state sales tax exemption would be consistent with other sales tax exemptions for worthy purposes (back to school sales tax holidays, sales tax exemptions on prescription drugs, etc.). State legislators should consider the wishes of their constituents and repeal sales tax collections on Internet purchases. They should pursue alternative sources of revenue more palatable to their constituents if the state needs additional funds.
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