Wednesday, May 8, 2013

Reluctantly Supporting The Internet Tax


Back in the early nineties, when on line retail sales began to take hold, there were already the liberal, greedy, "tax grabbers" that wanted to fulfill Ronald Reagan's description of them:  "if it moves, tax it!". I was against the Internet tax back then because I believed it would put a damper on a fledging new form of American capitalism.  

And I believed in allowing Amazon and E-Bay and all the thousands of other Internet retail start ups the opportunity to bloom into full fledged retail giants.   And here's why I believe it is now time for the Internet retailer's tax free status to end.

Amazon has become such a giant that it has literally left thousands of brick and mortar corpses scattered across the land.  Circuit City is no more.  Best Buy is on their last legs.  Even monster Walmart is feeling the pressure from Internet giants like Amazon.  

The problem is that Best Buy and Office Max and Barnes and Noble and Walmart must absorb the costs of building brick and mortar stores,  paying more for labor and utility costs, ship to store costs, and local advertising.  And they must all charge for the sales tax applicable to the area.  This gives the Internet Behemoths like Amazon a tremendous cost advantages when operating in a tax free environment.

So what you say!  Well here's the "so what".  The bricks and mortar stores support communities through the payment of sales taxes, hiring local citizens, and becoming a "citizen" in their respective communities.  Those sales taxes, and the income generated from income taxes on employees go toward supporting those communities.  To date, the Internet retailers have had so such responsibility and they are literally destroying the "brick and mortar" tax bases every community needs in order to survive and thrive.

And of all taxes collected, I like the sales tax the best.  It rakes in all the tax dodgers that otherwise contribute nothing to our society.  It collects taxes from welfare queens, illegal Mexicans, drug dealers, and tax dodgers all.  And without those "brick and mortar" sales taxes we could expect our property taxes to go far higher in order to meet local and state revenue requirements.

And what of the "whey and cry" from Internet retailers who say trying to collect sales tax for thousands of municipalities is an accounting nightmare?  I say bull hockey.  Within six months some innovative software company will have written a program that does just that.  Internet retailers are already deploying thousands of algorithmic data to track consumer preferences, consumer behavior and all manner of retail sciences.  Whether Quickbooks writes it or Intuit, or some new software start-up, the program will be there when it is ultimately needed.

The Senate version of the Internet Sales Tax bill has already exempted those companies with less than a million dollars in annual sales.  That may need to be tweaked a bit...perhaps raising the number to ten million in annual sales.  Never the less, it's time we began leveling the playing field between those who operate in a tax free Internet and those brick and mortar stores who've chosen to invest in our communities.  The tax inequality as it now stands is not fair, either to the retailers, or to our communities who need those sales taxes to support our community needs.


Ken said...

Personally I despise all taxes. The big reason for that is the way my tax payment is disbursed, and what it is spent on. I hardly think that stores like the names you call out will be killed if the internet is not taxed. Just by the sales numbers in the retail markets around me and the foot traffic in those locations. Everyday in broke Kalifornia looks like the day before Christmas. Our stores are always packed, seven days a week. I just can't fathom doors closing with traffic like that. Everyone of those "brick and mortar" fronts have internet pages taking advantage of the same tax free environment as the like of Amazon. So I rather think they would have a bit of an exposure and recognition advantage right there. Those not succeeding are probably not keeping up with the technology.
That said, if we are to entertain a new huge windfall to those horribly irresponsible, untrustworthy politicians some changes would need to be put in place. Just like the changes we wanted but did not get when the debt ceiling was raised. Before they are rewarded for their horrible mismanagement of our tax dollars they need to make many and meaningful cuts in all arenas and catering to lobbyists needs to be greatly curtailed. Something needs to be addressed with the inequality between the politicians and us peons. They need to suffer the effects of ALL the legislation they continuously pass on to us, for example, obamacare, SSI, etc., etc..Many of the tax measures being passed nowadays is so obviously a redistribution of wealth, so if socialism is what they want, they had better start by redistributing their own money first! An internet tax would be a monstrously huge bone given to a pack of nothing but junkyard dogs, that needs to be understood in the worst way. The idea that in that so many govt workers are making more than $100,000 per year at times more that two and three times as much as in the private sector. To offer another huge tax base would only exacerbate that. This country's labor force is using now, I believe, only 11% union labor and that is for the most part govt jobs. That may explain the income disparity but why should that exist? Government labor should never be unionized. The American people are their union, not a bunch of thugs extorting money from us. That needs to change.
I like and fully agree that a flat sales tax would even out a very uneven field. Like you said, it would bring a whole lot of new previously unpaid dollars to the revenue stream. It may even have a favorable side effect of causing those new participants to become interested in how their government manages the money they are now handing over. They may want to begin watching a news program, reading a paper, learning about the people they are voting for BEFORE they vote and understand the ignorance of,"We need to pass this bill before we read it", and demand better of those managing their money. Yes, show me a way to insure these changes are made and I will shout for internet tax right along with you. Until then, NO NEW TAXATION WITHOUT REPRESENTATION!! I mean, represent me and not some lobbyist, corporation or illegal alien.

A Modest Scribler said...

First Ken, you're fighting the wrong war here...government waste needs to be addressed but that has nothing to do with this. Secondly, those sales tax dollars are to benefit your local city and state.

Thirdly, brick and mortar stores do not enjoy tax free because the criteria is that they must not have a presence in the state..and literally every major chain has a presence in every state.

Fourth, re lots of foot traffic...that has nothing to do with operating margins..if that were the case then Circuit City would still be around, k-mart would not have gone into bankruptcy, sears and Best Buy would not be on there last legs and contemplated bankruptcy twice just in the last year. Just as Walmart destroyed millions of small businesses and thousands of down town business districts a tax free internet will destroy your brick and mortar and leave your cities hitting you up for more property taxes to offset the loss of sales taxes. AND, then you have just given all the welfare queens, all the drug dealers and all the income tax dodgers still another out...and YOU end up paying higher income and property taxes to make up the loss.

It is all too easy to talk about excessive government spending. You know my thoughts on that...but you're fighting a totally different war when you argue against internet sales taxes. Sorry, friend, we couldn't be farther apart on this one.

A Modest Scribler said...

Forgot to lost those Best Buy and Sears and other brick and mortar employers and you lose more income tax base and you get to pay out unemployment and medical for all those who lost their brick and mortar jobs.

I could cite another hundred bad things that will happen if brick and mortar loses this fight.