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 It should be repealed.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.
July 7, 2009 2:40 PM
The Chairman of the U.S. Senate Judiciary Antitrust Subcommittee on July 6 urged the Justice Department to investigate possible anti-competitive practices in the wireless industry. It is certainly appropriate for the DoJ to scrutinize the state of competition in industries that have become more concentrated, and to take action if violations of antitrust laws have occurred. Increased concentration and practices in the pharmaceutical, airlines, agriculture and other sectors are also being reviewed by DoJ. We are also seeing more concentration in other sectors of the economy as well. DoJ needs to look at all of them as part of its ongoing mission and take appropriate action if it finds antitrust violations.
In the meantime there are other problems in the competition/antitrust arena that are already fully evolved and defined, and which clearly will require a federal legislative solution. Both the DoJ and the FTC have done a commendable job in recent years in overturning many state real estate regulations and industry practices that force consumers to pay higher real estate sales commissions. These practices have been well documented in scathing reviews by 60 Minutes and hundreds of other electronic and print media. Despite DoJ's and FTC's effective work, some of those anticompetitive practices have become embodied in state laws, and neither DoJ nor FTC currently have the power to overturn them.
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Time For Congress To Act.
May 21, 2009 1:03 PM
The Obama administration is considering giving a single federal agency authority to regulate mortgages and other consumer-oriented financial products as part of the Administration's broader overhaul of financial regulation. Consolidation of the oversight of financial products that is now split between the Fed, the Securities and Exchange Commission, the Federal Trade Commission, and others would greatly improve efficiency. Assuring that the oversight organization is free from political influence and staffed with competent professionals dedicated to protecting consumers is essential. In designing the new institution we need to study the reason for regulatory failures at the Fed, SEC, OFHEO, and other agencies, and build protections against politicization into the new organization.
March 24, 2009 11:54 AM
The House of Representatives has passed legislation that would tax the bonuses of senior AIG representatives at a 90% rate. In one sense that approach is a good first step forward, and serves as a good example for how to approach similar abuses in other financial services firms. The step forward is that it is aimed at individuals rather than the companies. Companies don't make decisions, their senior executives do. Fine a company and you're really only punishing the stockholders, who in many cases are consumers who own the company's stock in their IRs, 401Ks or stock market accounts.
The mistake is that the House approach uses a shotgun where a scalpel is needed, it leaves the real culprits in place to wreak future havoc to our pocketbooks and the economy, and it micromanages personnel policies.
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The Right Way to Punish AIG.
