CBS News | States To Push Internet Sales Tax | August 31, 2005 16:30:55

The states are offering businesses a promise — and an implicit threat. If businesses register and start collecting taxes this year, they’re given a yearlong amnesty from the possibility that states may seek back taxes for online purchases.

“I wouldn’t be surprised if the biggest effect comes at the end of the 12 months when businesses say `I better take this opportunity while I can,”‘ said Hardt.

The 13 states are Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, New Jersey, North Carolina, North Dakota, Oklahoma, South Dakota, and West Virginia. Five that will be added in the next few years are Arkansas, Ohio, Tennessee, Utah and Wyoming.

OK, now who’s bright idea was this, huh?

Daniel J. Mitchell, PhD. wrote an article entitled Why Congress Should Not Authorize a State Sales Tax Cartel where he states the following:

Fearful of competition, some politicians in high-tax states want to stop their residents from saving money by purchasing products where taxes are lower. Using the excuse that they want to “streamline” and “simplify” retail sales taxes so that there will be a “level playing field” between Main Street merchants and e-commerce, these state and local politicians are asking Congress for unprecedented power to impose taxes on transactions that take place outside their borders.

The issue is not whether to tax Internet sales. States already have that power. Instead, the debate is about whether Congress should pass a law that allows taxation without representation. Should there be a national law, for example, allowing Utah to compel a Colorado business to collect and remit Utah taxes if that business sells something to a Utah resident?

The U.S. Supreme Court already has ruled that states may not tax companies that have no presence (or “nexus”) inside their borders. State and local politicians want to overturn this decision by getting Congress to approve a state sales tax cartel and attach legislation authorizing the cartel to a bill extending the Internet tax moratorium.

He further goes on to outline the threats to competition and privacy, as well as this being a dangerous precedent.

In conclusion, Dr. Mitchell states,

A destination-based sales tax cartel would be bad for taxpayers. It would damage competition and privacy, erode fiscal discipline, and lead to higher tax burdens. It would threaten personal privacy by allowing third parties to examine financial transactions and buying patterns. And it would harm the President’s ability to defend America’s economic interests when dealing with Europe’s welfare states. Rather than authorize a state sales tax cartel, Congress should encourage state and local governments to work together to implement origin-based or territorial sales tax reforms that would ensure that all purchases are treated fairly.

Taxation without representation in history.

What ever happened to the individual states being autonomous — so as not to create a conflict of interest or allow any other state, or even the federal government, to have undue influence over that state?

First we see it in federal programs such as the public school system, welfare system, the attempt to disarm our citizens, the outrageous taxation of cigarettes, alcohol, and now even the attempt to tax fatty foods if you can believe that!

Now they are still trying this one after congress already said no? What is going on here?

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