Tag Archives: sales tax

Internet Sales Tax – Getting Closer

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Internet Sales TaxI wrote about this issue back in August of last year but I want to talk about it again. The legislation to put a sales tax on goods you purchase via the internet is moving forward quickly and there doesn’t seem to be a great deal of opposition to the idea.

I don’t want to cover the same topics I wrote about last August so I’ll review them quickly and then discuss why this sales tax is not just an example of a money grab but also a real danger to our nation.

A traditional brick and mortar store requires infrastructure that an internet store does not. Roads to deliver shoppers, electricity, plumbing, parking, gas, and maintenance on all those things. The government pays for this and therefore a tax is placed on sales in those stores. This is fair and reasonable. If a company has a warehouse in a state where the sale is made then taxes apply although this should be somewhat reduced as the need for infrastructure is somewhat lessened at a warehouse as opposed to a traditional store. Fewer employees, smaller parking lots, less traffic, etc.

The main argument for the internet tax is that brick and mortar stores are at an unfair disadvantage because existing taxes increase the price of their goods. This is, as I discussed in my earlier post, not an unfair disadvantage, it is a completely fair and normal disadvantage. Internet stores have less overhead and they cost the government of that state less in infrastructure costs. This is a perfect example of capitalism. They have a better business model. The goal of a government is not to make the field perfectly fair for everyone. Did we put a huge tax on cars to protect the horse industry?

That’s what I want to talk about today in this follow-up post. What the federal government proposes to do undermines not only fair business practices but jeopardizes the growth of our country. My example of cars replacing horses seems ridiculous at face value. Cars contributed significantly to the growth of the United States and the world. They were better than horses in many ways. Not to say that they are perfect, pollution, accidents, etc. Still, I’m quite comfortable saying an effort by the government to stop the progress of cars, trains, and planes, would have left this country far in arrears of other countries who were taking advantage of the technology.

Maybe I’m being an alarmist to suggest that manipulating prices to encourage people to shop in stores rather than take advantage of internet sales is as much a danger to our country as would have been banning cars; but who can say what the future holds?

Internet sales offer many advantages. Fewer trips to the store, less pollution, fewer roads, fewer accidents, less law-enforcement, less emergency service, more parks, more people working from home. These are tangible economic, health, and social benefits. This is an example of government meddling that will end up doing far more harm than the perceived good it attempts to achieve. When the rest of the world sees the benefits and the United States does not; where does this lead?

If there are fewer brick and mortar stores and less traffic the government gets smaller. Thus our taxes should decrease! Let capitalism do its job. If internet sales are cheaper, more convenient, and better for society then they should win. Brick and mortar stores should vanish. The government shouldn’t have a vested interest in one or the other. That’s what this tax represents. The government taking sides to artificially alter the market. That’s never going to be good for the citizens of this nation.

What do you think?

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Twist
Current Release: The Sword of Water (buy it, read it, write a review, buy it again!)
Next Release: The Spear of the Hunt

Internet Sale Tax – Coming Soon

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Internet Sales TaxLegislation is slowly making its way through Washington D.C. that will institute a Sales Tax on internet purchases. Those in favor of this tax, although most refuse to call it a tax instead using the phrase Collection Issue, say it is unfair that internet sales do not have a sales tax whereas brick and mortar stores do have such a tax.

To understand why it is completely fair that Internet Sales don’t have a sales tax while Brick and Mortar do have one we have to understand the purpose of a Sales Tax, or any tax at all.

The rationale for such taxes is that in order to sell something to a consumer, the product and the customer must get to your store by state and federally built roads. They park in your store on free use parking lots generally built and maintained by municipalities. Stores use utilities; gas, electric, water, sewage, whose infrastructure requires government moneys. Internet sales clearly do not require this upkeep although if there is a warehouse where the product is delivered in the state it does require such resources. The roads used to deliver such a package to your door are also under that umbrella of activity.

However, the trucks that deliver goods pay gas taxes for the upkeep of the road. Gasoline taxes are generally justified as a way to pay for road and bridge building and maintenance. That makes perfect sense to me.

The only real justification for this new tax is the warehousing of goods which need employees to unload and load product for the consumer. These employees need water, heat, parking, etc. That is why Amazon is working out its own sales tax scheme with various states because they are building a network of warehouses all over the U.S. to ensure that your product is delivered promptly.

Now, here is my main point. If we become a society that orders our goods online we will significantly lessen the burden on utilities, parking lots, roads, and other government provided services. Brick and mortar stores will disappear and parks will appear. If we stop driving our cars all over to pick up toothpaste then the government spends less money and our taxes should likewise decrease. But, if we tax internet sales, whose price is lower for natural, capitalistic reasons, we are unfairly benefitting brick and mortar stores! Taxes should be lower on internet sales. This will, and is, creating many positive effects on consumption of gasoline, water, electricity etc! Not that the government should decide this one way or the other. If one business practice is cheaper and people like it then it should win out.

I’m not totally opposed to taxation on internet sales whose goods go through a warehouse in that state or municipality. I’m just saying it should be significantly lower for those specific cases and if there is no warehouse, there should be no tax at all. The reason it is lower is that only large trucks have to deliver the goods as compared to many cars coming and going. Warehouses have fewer employees than equally sized brick and mortar store where one warehouse might replace fifty or more traditional business locations.

The benefits of internet sales are many and we shouldn’t be discouraging this with unfair taxes that help brick and mortar stores under the misguided guise of “fairness”.

Tell me what you think in the comments!

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Twist
New Release: The Hammer of Fire