So it seems Bob Goodlatte, a Republican House member from Virginia has introduced for circulation among his Judiciary Committee colleagues a framework proposal for taxing internet sales transactions, something “brick and mortar” stores have wanted for some time.  Goodlatte’s aide says the plan is simple and fair.  As an article on the plan states, “Internet sales would be taxed according to the rules of the state in which the seller was located but would pay at the tax rate of the buyer.” (Joseph Lawler, Washington Examiner, August 25, 2016).  To be more specific, ”The draft indicates that state governments would distribute revenue using a national clearinghouse. For states that didn’t participate in the clearinghouse, taxes would be levied based on the origin state of the seller.” (Ibid.)  I am not sure what that means and the article did not provide more details.  But what seems clear is that if it passed the proposed legislation would allow states to tax transactions that involved sellers with no physical presence in the buyer’s state.

This tax proposal, besides striking me as just another way to allow governments to get funds for wasteful spending, is also unjust.  Let me explain, using an example.  Suppose I go down to my local bookseller and purchase a book.  Assume I am also a resident of the place in which the store is located.  The sales tax is supposedly designed to tax the transaction in order to raise and use funds that will benefit not only the purchaser (me) bit also the seller (the bookseller).  The seller in particular uses city/town services and is paying indirectly for them with the sales tax.  Now this kind of tax does not link benefits and costs very well, but at least it is a tax on the user of the public services provided.

Internet sales taxes are different.  The seller in state X is taxed but the seller receives no services from the state or local government in which the buyer lives (state Y) unless the seller and buyer both live in the same jurisdiction.  So the seller pays a tax but gets nothing in return.  Is that fair?  Is that just?

Well then, you could argue, the buyer should pay the tax and this is just one way to get him/her to pay for services they receive at the place of the their own residence.  But again, what does a local jurisdiction actually provide to a buyer, in the way of services, when only a mailed package is involved, that has any connection to services provided? The item is mailed from State X and arrives in State Y and goes to the mailbox of the resident in State Y.  But the traditional stores basically want their internet competitors to pay the tax, even if they have no presence in a given state to which the item is mailed.  What it sounds like is that the traditional stores want to get the internet stores just because—and only just because—they don’t pay those sales taxes.

This is just a naked attempt to satisfy local or state jurisdictions who are clamoring for more money.  I am very disappointed that Representative Goodlatte has anything to do with this scheme.  Of course, the lobbyists for the brick and mortar stores have praised the proposal as finally bringing “fairness” to taxation of sales.  Nothing could be further from the truth. It looks like taxing is going the same way as spending.  Government spends virtually whatever it wants on whatever it wants and taxes just to get money without any connection to actual services provided.  Not all local and state government spending is wasteful, but I see an increasing waste  as well as a growing appetite for more tax revenue.

Well, this has been going on for a few years now, but the internet tax has always been a particularly egregious example to me.  But this is the way Congress works increasingly.  Stop feeding he beast.