Gut-check for the GOP
May 2, 2013
Regrettably, legislation authorizing application of state and local sales taxes to Internet transactions cleared a procedural hurdle in the U.S. Senate last week by a comfortable bipartisan majority.
We’ll concede the ease of being duped. All the supporting arguments for the “Marketplace Fairness Act of 2013” are here, courtesy of the U.S. Conference of Mayors. But we’d argue that this immense new tax would be more accurately labeled the “Competition Suppression Act of 2013 and Forever After.”
A deception elegant in its simplicity, invoking “fairness” plants the assumption that it’s unconscionable to require only brick-and-mortar retailers to collect and remit sales taxes, bypassing discussion of the taxes themselves.
An example of the symbiosis between big business and big government, the Internet sales tax would pry loose untold billions to feed the government beast while crushing small on-line retailers with the burden of applying the myriad tax provisions of some 9,600 jurisdictions. (Some merchants say it’s only fair that everyone serve as tax collectors, but they’re only collecting for the states and localities where they live.) The biggest players expect to absorb the heavy cost and roll on; smaller ones can’t.
Tax boosters helpfully offer that various jurisdictions will unravel the complexity by harmonizing policies on what’s taxed and how much. Anyone born less recently than yesterday can see this one coming a mile away: every revision will be upward, to higher rates and broader coverage, because no jurisdiction will forgo revenue to meet a lower-taxing neighbor halfway. Today’s highest tax rates will become the floor, not the ceiling.
With the Senate on course to pass another very big, very bad bill, the Republican House majority will soon reveal much about what it’s worth.