Legislators at the federal level are scrambling to satisfy special interest groups. Debate rages about internet vendors providing unfair competition to brick and mortar establishments who have to collect and remit sales tax on their sales. This is not anything new.
For years, rural inhabitants who had no convenient access to shopping relied on mail order houses to provide them with those services. If the mail order house was not physically present in the state, usually no sales tax on their sales was charged. It was the buyer’s responsibility to file a “Use Tax Return” on these types of purchases, and pay the tax. Granted, purchasers seldom paid the “Use Tax”, and enforcement was practically non-existent, but the vendor should not be penalized for the purchasers dodging their responsibility.
“Why not?” you ask. Let’s dissect it.
HUGE BURDEN FOR INTERNET VENDORS
It would be an almost impossible task for all internet vendors to be able to collect and remit sales tax to the thousands of taxing jurisdictions across the nation. Talk of exempting “small” internet businesses smacks of unfairness to “large” internet businesses, and frankly, in my opinion, might be unconstitutional. Cities, school districts, counties, public transit authorities, and states all collect sales taxes. These vary from states to state, but each of the entities I just mentioned, in some place, some state, collect sales tax for support. I once worked as an accountant, responsible for filing sales and use tax returns, and I cannot imagine the nightmare of having to file returns in every taxing authority’s jurisdiction.
INTERNET VENDORS RECEIVE NO INFRA-STRUCTURE SUPPORT FROM LOCAL ENTITIES
Unless they have a physical presence in the state, internet vendors receive no infrastructure support. No firefighters, no law enforcement, no public utilities, no streets and sidewalks, no public transit. Why should they be burdened with collecting sales taxes for money hungry city governments, county governments and Public Transit Authorities?
U.S. EMPLOYMENT IMPACTED
Consider the impact such a law would have on U.S. employment. The internet can and does operate from anywhere in the world! Such a law could possibly drive vendors to foreign countries and local brick and mortar establishments would still be faced with “unfair competition”; only now, the unemployment caused by companies moving to foreign countries would affect the economy and brick and mortar businesses would further suffer.
Most important in my opinion, consumers would be denied the savings they realize from internet purchases.
ONE SIMPLE TAX
So what is the solution? Simple! Eliminate sales, use, value-added, property, and other kinds of taxes, and rely on one type of tax to fund government – federal and state income taxes! No loop holes, no serving special interests – none of that! Any income over the poverty threshold would be taxed. Rate could be graduated so that higher income taxpayers would pay a higher rate on their excess income, but no deductions except a business’ operating expenses and the exemptions for individual taxpayers’ dependents. . Tax returns could be as simple as a post card for individuals and a simple Form 1040 with a Schedule C attached for businesses. Wages and salaries plus net income from your business plus other income equals total income less amount allowed for dependents less the poverty threshold amount equals taxable income multiplied by tax rate equals what you pay in taxes! No more sales taxes, tennis shoes taxes, gas taxes, depletion allowances, accelerated double declining balance depreciation deductions, no federal excise tax, no estate tax, – nothing but one tax!
Heaven forbid that taxing authorities could live with such an arrangement, but wouldn’t our lives be much simpler and worry-free? Mine would!