Flutterby™! : Pick up their toys and go home 2011-02-11 23:16:54.681444+00

Pick up their toys and go home

2011-02-11 23:16:54.681444+00 by Dan Lyke 6 comments

In the midst of a sales tax dispute with Texas, Amazon decides to pull out:

"Texas retailers collect and remit sales taxes every day - whether the sale happens in a store or online," said Danny Diaz, a spokesman for the group. "Amazon.com was asked to play by the same rules, and has responded by eliminating hundreds of Texas jobs. Amazon could have chosen to collect the sales tax as Texas retailers do, but instead they opted to protect their special sales tax loophole to the detriment of hardworking families."

I chose that particular pull-quote not because I believe in all of the sentiment, but because I think it accurately sums up the feelings from all sides. And it seems to me that at a state level we should be thinking about ways to give regions ways to raise money aside from sales tax. Sonoma County has a bunch of levies that get collected through sales tax, and much of our local Petaluma funding is decided by how much sales tax gets collected here, but as we move to online purchasing being simpler and easier than brick-and-mortar retail, if we want to encourage local commerce maybe we shouldn't be taxing it...

Our local "oppressed by the government" vocal political faction has been whining about the sewer rate increases. One of the arguments was "many people can't afford more money for waste-water treatment". I suggested that income redistribution and social welfare was better done at the state or national level rather than the local level, and, at least among the people in my circles, suddenly the chatter stopped.

And as I've pointed out here, most transit funding is actually income redistribution. So, yeah, there's a lot of tax policy out there that's very indirect.

I'm not sure there are clear rationales behind any of the tax artifacts we see today. Sales tax is, typically, the only means to levy certain taxes at the local level that is universally unavoidable. Property tax can be avoided by renting rather than owning real estate. So locales with high sales tax and low property tax can be said to unfairly tax poor people who cannot afford property... yadayadayada...

The point is we are stuck with certain tax modalities for certain purposes and position in the governmental hierarchy. Chances are there was a time when there was much greater variety in taxation modalities across governmental units but its all been standardized through co-opting methods.

States are having a really tough time right now. The Fed can, in a pinch, print it's own money. Many states, like Colorado, have strict budgetary clauses in their constitutions, so finding additional tax revenue boils down to enforcing what's on the books. Online sales are sales and probably should be taxed just like local sales. Collecting sales tax might be a pain, but it would be hard to argue that Amazon lacks the computing facilities of McDonalds which manages to navigate not just retail sales but the added variety of food sales taxes.

I never understood the rationale for sales tax rather than graduated income tax, but then I heard Mike Huckabee explain that the "fair tax" (flat sales tax)taxes the act of taking from the economy, while the income tax taxes the act of giving to the economy, and that a graduated progressive income tax taxes more heavily those who give most. I wrote him offering to him a gift in the form of my accepting $1M from him, much as Sarah Palin or Bernie Madoff gave to the economy by accepting millions of dollars. He never responded.

"Start" going after their own citizen? I still have scars from the Tennessee Department of Revenue claiming HTS owed .5 million plus penalties and them threatening to "take away my birthday" or some such nonsense aimed at me personally. HTS won that case, but it was expensive to fight.

I envision "tax stamps" on packages being shipped.... all kinds of messy work-arounds like I see in foreign countries now.

From a practical standpoint, either states are going to have to start going after their own citizens (I'm supposed to pay for sales tax for products I buy out of state and, having my own business, I actually do, but most fellow citizens don't), or sales/VAT/similar taxes will have to become a federally collected levy.

In many ways, I think sales taxes are one of the fairer taxes. It's also one of the few places states can still exercise some sovereign powers. I really do expect that soon, on-line retailers will be forced to pay sales taxes, but it is an interstate commerce law that affects far more than just on-line sales.

Maybe the question and test will be: Can a state make receiving shipments from online non-sales tax paying e-tailers illegal and enforce it?