… and all compulsory payments to government where the payee is not the proximate and immediate beneficiary are legalized robbery which is evil. Thus the notion of the minimum evil required for the necessary “common good.” Is a tax on one of the more successful internet business models warranted? Should it be a local tax, a state tax, or a federal tax? Rothman posits that any such tax on consumption is regressive and income taxes should prevail.

“deserving activities within the public sector”

Some areas we may see as a “common good.”
Some areas I may view as a “necessary minimum evil” and you may protest.
The remainder of what is deserving in your eyes is unjustifiable evil in my eyes.

However, most of the tax money goes to activities completely obscured from your and my eyes and we have no clue if it is for the common good or for some unfathomably unspeakable evil that will curse all the generations to come. Most likely, the tax money goes to “entitlement” subgroups, programs and government contractors where political payback is primary and any alleged “deserving activity” benefits are secondary.

So, how does government pick a specific target for the “shakedown?”
First, the mark has to have the money. There goes the middle class under the bus.
Second, the mark must be easy enough to make it worth going after.
Third, (and for a wise government) the goose must not be killed to get that golden egg. The failure of most taxing schemes is that they tend to drive the primary cash generator (not beneficiary) out of the tax jurisdiction. Also, tax schemes tend to be shaped by special interest rather than some egalitarian notion of the “common good” …

http://www.pogo.org/investigations/government-corruption/

A first principle for any taxation (sales/consumption tax or income/production tax) esp one that claims “common good” or “deserving activity” should be complete transparency. Everybody’s data becomes verifiable public record. That includes the income as well as all the outlays.

The second principle is that the administrators (tax collectors, tax spenders) be completely accountable for their actions. The review of that accountability must also have complete transparency.

The third principle is that the government model must be a business model. It must meet its own standards that it places on the business community for accounting and financial surety. The inability and unwillingness to account for spending taints the whole process.

I don’t know of any government in the US that meets any of the these principles in a verifiable way, much less all three of them. Randal Stross sees a good way to make money for himself by throwing Amazon under the bus. Rothman says “No fair! ,,, throw all those elderly ladies (demographically the core of the “tax base rich”) … under the bus! Until we can agree on transparency, accountability, or fairness I submit that the vast majority of us are all “marks” for going under the bus and only the clever and resourceful minimize the damage (while fairness dies first). The really big sharks, the few globally rich, only net more money off any of the taxing schemes, which is why they tend to be proponents. Those billionaires have the means (and exercise those means) to exclude themselves from the “tax base rich.” The rule for them is that regardless what they pay to any governments, the governments pay them back more.

Before exceptionalism is abolished, political obscurity and lack of transparency must be absolutely abolished. Once everyone sees that there really is no pea under any of the walnut shells, the rules will change.

In fact, I would submit that much of the problem arises from the continual habit of creating the maze of exemptions every time somebody makes enough noise. By doing that, we get rid of the political willpower to address the big problems.

So, before we abolish sales taxes, let us abolish exceptionalism (Internet exceptionalism as well as services exceptionalism, religious organization exceptionalism, and all the rest). Make the misery of these things real and palpable for the rich, the powerful and the rest of us instead of artificially lessening it by handing out goodies to the loudest squeaky wheels. Once that happens, the political willpower to abolish the things in total will come about (or at least lead to something closer to an honest debate).

mff

I don’t have a strong opinion about the worth of sales taxes vs. other taxes, but if you’re going to have them, they should be as fair as possible. Exemptions to help out poorer citizens sound reasonable, and justify exemptions for necessities like food and clothes that exist in many states. Exemptions for folks who can easily get online do not have that same quality.

Plus, as has been pointed out upthread, most of us buying from Amazon *are* supposed to pay tax on what we buy, because of use tax laws. So why should we get a special way to evade it? It’s not like Amazon wouldn’t be able to calculate and collect it if they had to– big brick and mortar chains do it as a matter of course. The rules may be a bit complicated across different jurisdictions, but that’s what databases are for.

And if the idea is to replace sales taxes with higher, more progressive income taxes, how will cities replace their lost revenue? Especially in red states with legislatures that oppose ALL taxes?

Here in California, we have to pay “use tax” on items we don’t pay sales tax on. It’s the same thing–same tax rate–except that it’s much more of a burden to have to file a report than to pay when you buy something. Frankly, it would help us enormously if Amazon would collect them at the point of sale. Tiger Direct too, for that matter. We’ve gone through a huge rigamarole (and had to pay interest on back taxes) just because Amazon *doesn’t* collect sales tax.

Paula

Sales taxes would be regressive if applied on all products (because poor people spend a higher percentage of their income). Where sales taxes apply only to some products (in California, for example, food is excluded), determining regressivity is trickier.

All taxes have their problems. I personally like the idea of a progressive sales tax (i.e., consumption tax), rewarding those who save. But I agree with Rich that a level playing field is essential.

Rob Preece
Publisher

Also, Washington has no state income tax, only the sales tax. So if the sales tax was repealed, there would have to be a new tax system to replace it, probably the income tax. So which is worse: the sales tax or the income tax? When I lived in Virginia and Maryland, the states had both, but in the long term the amount I paid to the taxman was about the same. Other states may very. If I recall correctly, Vermont pays the the most overall tax and Alaska the least.

As for the sales tax, at least there are no loop holes for tax lawyers and accounts to finagle downward for the rich.

No, I don’t want any company to be an “acceptable monopolist.” I’d rather that B&N not have to collect sales taxes, either. Or local merchants!

I suppose the case could be made to force Amazon to collect until the law changes. I’m open to that. But the real solution is to abolish the sales tax on everything.

Thanks,
David