Last week, while testifying before the Advisory Commission of Electronic Commerce, a group of bureaucrats — also known as state and local government officials — sang a familiar tune. They hummed a few bars, did a little soft-shoe, and claimed that public safety and public education will deteriorate without sales tax revenue from e-commerce.
To hear them tell it, the Internet and e-commerce is snatching the food out of babies’ mouths and is responsible for bankrupting public education.
The Tax-and-Spenders at the New York meeting spent the entire day going through their usual apoplectic harangues about how e-commerce must be taxed and taxed soon — or it’s going to be Apocalypse Now.
Michael Mazerov, an expert from the Center on Budget and Policy Priorities, told the panel that states stand to miss out on $10 billion (US$) each year if they don’t quickly close the “de facto tax loophole” for online sales.
Representatives from states like Tennessee, which gets 60 percent of its operating revenue from sales taxes, wholeheartedly agreed with Mazerov.
But opponents of taxing the Internet counter that government is already too big and is never satisfied with the amount of money it collects.
Others blame the complexity of the tax system itself for the confusion surrounding the taxing of e-commerce, calling for a more simplified code.
Nonetheless, after all the testimony is heard, the 18-member panel must report to Congress by April 2000 on how the state and local sales taxes should — or if they should — be levied on e-commerce transactions.
To Prosper Or Die
I think there is much more at stake here than whether or not e-commerce is taxed. The fact of the matter is that many of the solutions being offered by the officials are symptomatic of a much deeper misunderstanding of the economic forces at play.
These people seem to think that it is the government’s right to automatically confiscate the fruits of private labor and investment. They somehow always blame private enterprise for their mismanagement of public funds. They hold firmly to the belief that individuals can only prosper when government takes more of their money from them.
Just the Opposite is True
Many economists feel that the world’s fragile economic recovery is due in great measure to the hope generated by the promise of a soaring new Internet economy. This new economy is based on private initiative and international free enterprise — not taxation.
Some of these observers believe that if the governments of the world continue to insist upon taxing and regulating this new economy, the Internet could die before it has a chance to really live.
On Deaf Ears
I have no illusions that the Tax-and-Spenders of the world really care about the consequences of their actions. Their arrogant attitudes seem to say: “Don’t complain too much — or we’ll tax your words.”
All the same, I’d like to see this issue become a rallying point for citizens throughout the world, beginning on a grass roots level.
Instead of printing bumper stickers that say “No Nukes,” we could print some that say: “No Taxing E-commerce.”
What suggestions do you have for keeping taxes offline? Let’s talk about it.