Republicans for Bigger Government
On today's Coffee & Markets podcast, Francis Cianfrocca and I discussed the dreams of more tax revenue to fuel bigger government in the form of the Amazon tax. The latest, from the Wall Street Journal:
“The newfound support among Republicans is a dramatic change from just a few months ago. In February, at the Republican Governors Association meeting in Washington, one agenda item was online sales taxes. The reaction was decidedly cool, with Louisiana Gov. Bobby Jindal worried that the effort sounded like a new tax, according to two attendees…”
“Seizing on the recent political shift, Sen. Lamar Alexander, a Tennessee Republican, and co-sponsors from both parties are attempting to speed up action on a bill they wrote to give states authority to compel online companies to collect sales taxes… “Mr. Alexander fine-tuned the arguments for a federal solution to his fellow Republican lawmakers. "Conservatives don't want to pick winners and losers" in business, said the former Tennessee governor… "The handwriting is on the wall that states will collect sales taxes on online purchases," Mr. Alexander said. "This is going to happen—if not this year, then definitely by next year.”
And while most online retailers oppose it, Amazon is willing to cut a deal to get the same day delivery opportunity which is their Holy Grail (plus, they get to charge affiliates for calculating the tax).
“Republicans' general opposition to new taxes, particularly broad-based ones, led GOP governors to avoid considering the sales tax, even as its potential value to state coffers grew. In most cases, the no-new-taxes sentiment trumped pleas from in-state retailers that they would have to lay off employees or close their doors if their online competitors kept undercutting their pricing… "But the current economic environment made states start looking harder at this for new revenue that costs them nothing," said Sandy Kennedy, president of the Retail Industry Leaders Association… "What we saw here was a rapidly growing bipartisan coalition of business groups, labor, Republicans and Democrats coming together because money and jobs were more important than political gamesmanship," said New Jersey Assemblyman Troy Singleton, a Democrat and union official who strategized over beer with an official from the state Chamber of Commerce on supporting the Amazon package.”
Republican governors who claim they need these sales tax revenues to keep other taxes from going up are describing something that, in practice, has never happened. As I noted last week, the revenue has gone straight back into state coffers… when there’s been revenue at all. The vast numbers NCSL quotes in the WSJ have never materialized for states which attempted to collect, because in practice it's just a shift: local retailers lose out on income, lowering their income tax burden and mitigating the increased sales tax revenue.
But that’s not what this push is about – instead, it’s about future Democratic administrations which will have, in effect, the ability to create a vast new revenue stream to continue the grow of the size of government.
Most Republicans think of this as a one for one inequity – you buy a bag of widgets from Amazon instead of from Home Depot. But by opening this door, Republicans will allow the creation of a vast new tax on digital product lines and downloadable content. This legislation will inevitably make an iTunes Tax like the one Democratic Governors Association head Martin O’Malley has proposed a reality.
This represents nothing less than Republicans accepting their role as tax collectors for the pension/entitlement state, unwilling to take political penalties from cutting government employment or Medicaid, and willing instead to cave to create a higher tax burden on their citizens. If they were really interested in shrinking government, they'd be closing avenues to taxation, not opening up new ones.
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Comments:
Nov '11
Re: Republicans for Bigger Government
I can see that point... but I can see the other side too. If Local Retailer A has to charge sales tax and Internet Retailer B doesn't, isn't the government giving an artificial advantage to B, and isn't that a problem?
Of course, rather than simply raising taxes on B, the government should theoretically do what conservatives are urging on the federal level: get rid of the loopholes (i.e. do start taxing B) but lower the rates for everyone across the board.
Jun '10
Re: Republicans for Bigger Government
If you are going to tax, tax fairly/ Don't tax me unless you are willing to tax thee. I hope that none protesting here has ever voted for a local sales tax to improve the sewer or water system in your neighborhood and then gone out and bought products, available locally, over the internet tax free. Sales taxes are the only taxes voted on directly by each citizen. Everyone pays them equally according to how much they purchase. I do not want a bigger government and I sure don't want one that taxes me, but not my neighbor.
Dec '11
Re: Republicans for Bigger Government
Republicans should not be completely against taxes. They should recognize them as a necessary evil, aim to keep them minimal and unobtrusive, but also be willing to try and find the way to tax that is most beneficial/least harmful. As such, I don't mind them kicking the tires on internet taxes, but they should be made up for with cuts elsewhere
Aug '10
Re: Republicans for Bigger Government
The thing is, the internet has essentially been a big 'enterprise zone', with low barriers to entry and low transaction costs. The result as been an explosion of innovation and wealth creation, and the one economic bright spot of the last 20 years.
Let's not turn it into another over-regulated economy where only the big, connected companies survive and innovation is squashed under red tape and political muscle. It's too bad that the brick-and-mortar economy has to deal with all this crap, but the answer is not to put the internet under the same thumb.
Jun '12
Re: Republicans for Bigger Government
Let's look at the other side.
Let's say I am a small business owner, and I put some of my wares up on the internet. I do not have a shop nor home in your town, so I had no opportunity to vote on your taxes.
Yet you're demanding that I do the extra labor of collecting your taxes and remitting them to you, for absolutely no benefit to myself. In short, I am working for your town for nothing.
This is fair?
Jun '10
Re: Republicans for Bigger Government
ConservativeWanderer
Let's look at the other side.
Let's say I am a small business owner, and I put some of my wares up on the internet. I do not have a shop nor home in your town, so I had no opportunity to vote on your taxes.
Yet you're demanding that I do the extra labor of collecting your taxes and remitting them to you, for absolutely no benefit to myself. In short, I am working for your town for nothing.
This is fair? · 2 minutes ago
Yes, if my town is producing your revenue.
Jun '12
Re: Republicans for Bigger Government
cdor
ConservativeWanderer
Let's look at the other side.
Let's say I am a small business owner, and I put some of my wares up on the internet. I do not have a shop nor home in your town, so I had no opportunity to vote on your taxes.
Yet you're demanding that I do the extra labor of collecting your taxes and remitting them to you, for absolutely no benefit to myself. In short, I am working for your town for nothing.
This is fair? · 2 minutes ago
Yes, if my town is producing your revenue. · 0 minutes ago
No, your town is not producing anything for me. I am not using your town's roads, I am not calling your town's police or fire departments, I'm not hooked up to your town's water or sewer systems.
People are providing my revenues, not towns.
Once again, a conservative is using a lefty concept, perhaps without knowing it. This time it's the "government is the name for the things we all do together" concept.
Jun '10
Re: Republicans for Bigger Government
ConservativeWanderer
cdor
ConservativeWanderer
Let's look at the other side.
...Yet you're demanding that I do the extra labor of collecting your taxes and remitting them to you, for absolutely no benefit to myself. In short, I am working for your town for nothing.
This is fair? · 2 minutes ago
Yes, if my town is producing your revenue. · 0 minutes ago
No, yourtownis not producing anything for me. I am not using your town's roads, I am not calling your town's police or fire departments, I'm not hooked up to your town's water or sewer systems.
Peopleare providing my revenues, not towns.
Once again, a conservative is using a lefty concept, perhaps without knowing it. This time it's the "government is the name for the things we all do together" concept. · 9 minutes ago
People voted for those taxes and those people should pay them. Collecting is your cost of doing business, just like mine. Nothing "lefty" about it.
Edited on July 17, 2012 at 5:06amJun '12
Re: Republicans for Bigger Government
cdor
ConservativeWanderer
cdor
Yes, if my town is producing your revenue. · 0 minutes ago
No, yourtownis not producing anything for me. I am not using your town's roads, I am not calling your town's police or fire departments, I'm not hooked up to your town's water or sewer systems.
Peopleare providing my revenues, not towns.
Once again, a conservative is using a lefty concept, perhaps without knowing it. This time it's the "government is the name for the things we all do together" concept. · 9 minutes ago
People voted for those taxes and those people should pay them. Collecting is your cost of doing business, just like mine. Nothing "lefty" about it. · 2 minutes ago
Edited 0 minutes ago
I didn't vote for those taxes; I'm not in your town.
The purchase wasn't made by the government of your town, it was made by an individual. Therefore, the revenue is not "produced" by your town any more than "someone" made my business' success possible, as Obama believes.
Jul '10
Re: Republicans for Bigger Government
This conversation is hilarious.
So far, the best critique seems to be that taxing "itunes" subscriptions will grow oversight. I don't much care for that, but I fail to see why renting/buying a retail space should require me to collect and remit sales taxes while renting/buying a domain name should exempt me.
I'm selling in the same jurisdiction, right?
The notion that implementing consistently applied sales taxes equate to crony capitalism is particularly amusing. As we all know, a simple, consistent tax policy is the bane of the little guy, since he has an army of tax pros at his disposal.
Edited on July 17, 2012 at 5:19amJun '10
Re: Republicans for Bigger Government
CW, your revenue was produced by the people of my town who voted for sales taxes and bought your merchandise which was shipped to those people living in my town. If they came to your town and purchased those goods from you, they would pay your town's sales taxes. What's the problem?
Jun '12
Re: Republicans for Bigger Government
Palaeologus: So far, the best critique seems to be that taxing "itunes" subscriptions will grow oversight. I don't much care for that, but I fail to see why renting/buying a retail space should require me to collect and remit sales taxes while renting/buying a domain name should exempt me.
I'm selling in the same jurisdiction, right?
The notion that implementing consistently applied sales taxes equate to crony capitalism is particularly amusing. As we all know, a simple, consistent tax policy is the bane of the little guy, since he has an army of tax pros at his disposal. · 0 minutes ago
Let's try this.
Let's say that some people from your town, where there is a sales tax, come and visit my town, where there isn't. They purchase several souvenirs, for which I don't charge them sales tax. Are you going to send your cops after me for not collecting your tax?
But suddenly, if my business is on the internet instead of a brick-and-mortar store, I am required to collect your town's tax even though I wouldn't be if they'd walked into my store in town?
Jun '12
Re: Republicans for Bigger Government
See immediately above. They would pay MY town's tax (if any), not YOUR town's tax. What happens if my town has no sales tax?
Jun '10
Re: Republicans for Bigger Government
Palaeologus: This conversation is hilarious.
So far, the best critique seems to be that taxing "itunes" subscriptions will grow oversight. I don't much care for that, but I fail to see why renting/buying a retail space should require me to collect and remit sales taxes while renting/buying a domain name should exempt me.
I'm selling in the same jurisdiction, right?
The notion that implementing consistently applied sales taxes equate to crony capitalism is particularly amusing. As we all know, a simple, consistent tax policy is the bane of the little guy, since he has an army of tax pros at his disposal. · 1 minute ago
Edited 1 minute ago
I like your sarcasm and obviously agree with your point.
Oct '10
Re: Republicans for Bigger Government
Palaeologus: This conversation is hilarious.
So far, the best critique seems to be that taxing "itunes" subscriptions will grow oversight. I don't much care for that, but I fail to see why renting/buying a retail space should require me to collect and remit sales taxes while renting/buying a domain name should exempt me.
I'm selling in the same jurisdiction, right?
The notion that implementing consistently applied sales taxes equate to crony capitailsm is particularly amusing. As we all know, a simple, consistent tax policy is the bane of the little guy, since he has an army of tax pros at his disposal.
You've not addressed the well-made point (by Conservative Wanderer) that traditional retail space draws on local govt services and thus 'should' collect taxes from local customers to cover those costs. A web site in Timbuktu does not impact local govt-provided services. This internet tax is just protectionism by another name. It protects traditional retailers from competition--from a better, more efficient way of providing goods & services.
Jun '10
Re: Republicans for Bigger Government
ConservativeWanderer
See immediately above. They would pay MYtown's tax (if any), not YOURtown's tax. What happens if my town has no sales tax? · 4 minutes ago
Good for everyone...there would be no tax. BTW, does your town not have sales tax?
Jun '10
Re: Republicans for Bigger Government
HVTs
Palaeologus: This conversation is hilarious.
So far, the best critique seems to be that taxing "itunes" subscriptions will grow oversight. I don't much care for that, but I fail to see why renting/buying a retail space should require me to collect and remit sales taxes while renting/buying a domain name should exempt me.
I'm selling in the same jurisdiction, right?
The notion that implementing consistently applied sales taxes equate to crony capitailsm is particularly amusing. As we all know, a simple, consistent tax policy is the bane of the little guy, since he has an army of tax pros at his disposal.
You've not addressed the well-made point (by Conservative Wanderer) that traditional retail space draws on local govt services and thus 'should' collect taxes from local customers to cover those costs. A web site in Timbuktu does not impact local govt-provided services. This internet tax is just protectionism by another name. It protects traditional retailers from competition--from a better, more efficient way of providing goods & services. · 1 minute ago
I always thought conservatives were for limited government, not against allgovernment. Some taxes are necessary. China won't loan forever.
Jun '10
Re: Republicans for Bigger Government
Good night all.
Oct '10
Re: Republicans for Bigger Government
HVTs
You've not addressed the well-made point (by Conservative Wanderer) that traditional retail space draws on local govt services and thus 'should' collect taxes from local customers to cover those costs. A web site in Timbuktu does not impact local govt-provided services. This internet tax is just protectionism by another name. It protects traditional retailers from competition--from a better, more efficient way of providing goods & services.
In fact, why doesn't your town send my internet business a check for the value of decreased maintenance and other use-related costs that I've enabled by making it unnecessary for local citizens to drive on the roads or otherwise consume govt services? Since I've made it possible for your citizens to stay home, how about cutting me in on a share of the town's improved fiscal fortunes?
Oct '10
Re: Republicans for Bigger Government
cdor
HVTs
You've not addressed the well-made point (by Conservative Wanderer) that traditional retail space draws on local govt services and thus 'should' collect taxes from local customers to cover those costs. A web site in Timbuktu does not impact local govt-provided services. This internet tax is just protectionism by another name. It protects traditional retailers from competition--from a better, more efficient way of providing goods & services.
I always thought conservatives were for limited government, not against all government. Some taxes are necessary.
Red herring alert. There are no anarchists here. No one is saying all govt should be eliminated or that some taxes aren't necessary.