Online Sales Tax

There is currently a push in Congress to pass a bill that would allow states to collect sales taxes from online sales.  While it is not inevitable at this point that it will pass, it is looking more and more likely that something will get through.

There was a poll on Yahoo Finance that asked the following:

"The Senate is considering a bill that would allow states to collect taxes on online purchases.  Should there be an internet sales tax?"

As I write this, the answers were as follows:

10% answered, "Yes, states need the income."
28% answered, "Yes, it levels the field for brick & mortar stores."
43% answered, "No, zero tax is part of the e-commerce appeal."
19% answered, "No, it will hurt small online businesses."

Of course, this is not a scientific survey or sample.  But it does give us an idea of where the American people stand on this issue.  For the 10% who say that the states need the income, they are almost completely hopeless.  They are so far gone that I do not even try to speak to them.

For the 28% who are in favor of an internet sales tax because it would level the playing field, I have some hope for.  They are wrong, but their reasoning is a little bit understandable.  It is true that it is not exactly fair the way things are right now.  Online stores have an advantage over physical stores that have to collect sales taxes for everyone who buys.  But this is no reason to punish the online stores.  If they want to advocate fairness, then how about reducing or repealing sales taxes for the physical stores.

Having to pick just one answer, I would pick with the plurality here, although I also could concur that online taxes will hurt small online businesses.  But it is good to know that a majority at least voted against having the tax.  I suspect that a poll with a valid sample would show something similar.

Unfortunately, I don't know if this will be enough to stop it.  It will depend on how strong of an opinion the slight majority holds.  If people are irate and start emailing and calling their so-called representatives, then it may actually stop it from passing.

If Congress does pass it, I have no doubt that Obama will sign it.  Obama and his fellow Democratic politicians like to talk about helping the poor, but most of them are simply lying.  They don't care about the lower class or the middle class.  If they can pass another tax, they will do it.  (This isn't to say that Republican politicians care about the poor.  It is just that their rhetoric about it is not as strong.)

One time a couple of years ago I attended a presentation given on the so-called Fair Tax (which I don't agree with because it doesn't do anything to cut government).  After the presentation, a few of us (mostly libertarians) were having a discussion with the guy that presented.  The subject of an internet sales tax came up.  The guy assumed that we would be in favor of it.  I am not sure why he was surprised, given that most of us were not keen on the idea of a national sales tax.

On the other hand, I think most of us were surprised that he so heavily favored a national sales tax.  I suppose I was a little naive in thinking that he at least somewhat favored free markets.  But that really clinched it for me that most hardcore Fair Tax supporters are really statists.  They don't really want to see a big reduction in government.  They just want to try to make it more "fair" in how we are getting ripped off.

This is typical Republican conservatism.  Most Republicans will say that it is unfair that almost half of adult Americans do not pay any federal income tax.  Their solution is that everyone should have to pay something.  My solution and the solution of most libertarians is that nobody should have to pay federal income taxes at all.

In conclusion, I don't know if the American people will be strong enough to oppose an internet sales tax.  The federal and state governments are desperate for more money right now and they are trying everything they can.  It is all going to come crashing down on them.  In the meantime, I hope that I can keep buying things online without paying sales taxes in most cases.