Last updated on 2012.12.16
Brad Ford is the worst writer in Gordon Howie's Potemkin-village blogroll. Howie and Ed Randazzo are permanently reality-challenged, but at least I can understand their primal screams of Guns, God, and Glory. Ford can't even craft a coherent argument.
Consider this morning his latest screed, "No to Online Sales Tax." Ford starts with Reagan... which usually indicates a conservative wannabe is pretending to be a Hollywood-trained grandfatherly voice of wisdom rather than a rhetorical nincompoop. He then drifts through the following points:
- Government needs more money, but it should spend less money.
- Sales tax may be charged at point of sale or point of delivery.
- It might be fair to let a New York tourist send sales tax on a purchase at Wall Drug back to New York.
- It's unfair to local businesses that online retailers don't have to pay sales tax.
- Local retailers are making big profits and should stop whining.
- Capitalism doesn't mean "leveling the playing field."
- Ford's church overbudgets to trick its parishioners into donating more... so government should get rid of unnecessary expenditures (no, really, Ford places these two ideas in one paragraph).
- Public libraries and due process are wastes of tax dollars.
- We need austerity; increased taxes hurt the economy and allow "vague 'redistribution' to who knows what kinds of liberal do-gooder programs."
I want to offer a coherent rebuttal to Ford's post, but I can respond coherently only as an English teacher: This post is an unrevised stream-of-consciousness regurgitation of osmosed radio-fog talking points that fails to develop a single clear thesis.
As I do Brad's work for him, the thesis I distill from his rant is that government (along with local retailers) is bad; therefore, tax-dodging and unfair tax enforcement are fine.
To excuse burping up all the ill-digested opinions gurgling in his gut, Ford unnecessarily embraces unfairness. Taxing online sales doesn't necessarily mean increasing government revenue or spending. We could tax online sales, access currently untouched economic activity, reduce the overall sales tax percentage, and thus lower the tax burden on consumers currently making up for online tax-dodgers. Or, instead of giving a break only to tech-savvy cheaters, we could ban sales tax altogether, clear a regressive tax from our books, and focus on making income and property tax more equitable.
Ford is utterly unaware that he's improperly fusing two separate policy debates. What we tax and how we tax it is one issue. What we spend our tax dollars on is another issue. We can have a fair and lively debate about what we want government to spend money on. But unless Ford is advocating anarchy (and his writing style suggests anarchy of thought), we know government is going to spend money on something, thus requiring a fair and enforceable system of taxation. To advocate unfair rules and unfair enforcement in taxation isn't just irresponsible writing; it's irresponsible citizenship.
Paying use tax is the law in SD. As a small business, we have to pay use tax on online sales just like every SD resident is supposed to. Businesses pay use tax when we report and remit our sales tax to the state. Businesses are audited by the Dept. of Revenue. They are very thorough and will find any mistakes you may have made in your bookkeeping. Individual citizens rarely file use tax forms and pay the required amount to the state. If they did we wouldn't be dealing with the budget problems we have now. Education would be able to see increases if the money was there. As time goes on, more and more purchases will be made online cheating our state of the revenue that pays for education and all of the other programs we want to see fully funded.
Rocket launchers delivered to your door tax-free!
"Supreme Court Justice Antonin Scalia on Sunday said that even “handheld rocket launchers†could be considered legal under his interpretation of the Constitution’s Second Amendment."
http://www.rawstory.com/rs/2012/07/29/scalia-handheld-rocket-launchers-could-be-constitutional/
All distant sales should be subject to a federal sales tax mostly refunded to states on the basis of population. Enabling a bunch of states to cooperate requires huge complicated databases continuously updated with addresses and correct zipcodes. A federal tax requires none of that. Opposition to state work arounds of the constitution does not require general opposition to all taxes. The idea is a bumbling gross intrusion of privacy requiring a lot of totally unnecessary bureaucrats.
In any case, the attitude of SD merchants is rooted in the idea that we got you locally and you can't save money by driving to get a fair price. Most of them will just jack up prices 6 or 8%. The state versions of the online sales tax should be labeled as "The Screw the Consumers Act." A whole new form of taxation without representation.
Man the barricades.
Like Michael, I must pay use tax because, as a business, I have to file a sales and use tax return. The amount of use tax that I owe comes from online and "800-number" (remember those?) sources. It amounts to a couple of hundred dollars a year, sometimes less.
Whether source-based or destination-based, an online sales tax (as it is called, oversimplifying) presents a massive administrative burden. It also creates the spectre of taxation without representation, as Douglas points out. Yet, as some states have correctly said, the lack of such a tax is unfair to local bricks-and-mortar businesses.
Most ominous, from my standpoint, is the trend for some states to consider imposing corporate income tax on business sales that come from out of the state. Not surprisingly, the states with the worst deficits (and that, coincidentally, seem to have the highest tax burdens) are the most aggressive in this respect.
Unless Congress passes a law to create a "bright line" standard for tax nexus, interstate businesses could eventually have to file dozens, hundreds, or even thousands of state, county, and city tax returns every year. Of course they'd never do such a thing. They'd either go out of business or else (can you guess?) go offshore.
As an additional thought ... When I suggested on a blog, some time ago, that people voluntarily pay use tax to South Dakota, on their out-of-state purchases, I received ridicule.
Who in their right mind, said my contemporaries, would pay a tax voluntarily?
Of course we could impose an income tax here in South Dakota. Everyone would have to file. There'd be a line on that return concerning use tax owed. Anyone who entered zero on that line would risk an audit. And of course, state tax audits tend to arouse the curiosity of the federal IRS, as well.
It would be interesting to see the online purchases made by our lawmakers and then find the associated self reporting that they are required to submit. If they've purchased online and not submitted the proper tax, would that tax fraud be impeachable?
Wonder if there is any way to track those tax filings by legislator.
Easier yet, would be if they would self disclose their online purchases and corresponding tax filing. Heck, Stan G does it....
Legislators and radio moderators may not be amused by having to file their own reports. I got banned from commenting on SDPB Radio for a few years back when the SD Revenue Dept and a few legislators started beating the drum for their viciously intrusive tax consortium. I asked how many of the legislators would like 30 state revenue departments to know they were purchasing Viagra or gallons of wine and if the female moderator would appreciate knowing that 30 states were aware that her husband had purchased a chastity belt for her.
They did not respond that it ceased sounding like such a peachy idea, instead they and Janklow decided to kill the messenger.
Separate the loaded nature of the above "purchases", and there are still all kinds of things people may purchase online that nobody needs to know about...and nobody would need to know what was purchased or where with a Federal tax refunded to states not on the basis of purchaser or seller location, but simply pro-rated on the population of the states...or some combination of the population with double counting of K-12 and Higher education students in any state.
I suspect the amount actually collected will be much less than the inflated estimates. When they first promoted the idea of a tax consortium, Nebraska and South Dakota were both projecting very similar tax collections. Somehow that did not seem to make any sense then unless all the estimates were numbers pulled out of blue sky.
A distant sales tax should be applied to stocks and bonds as well. Also, newspapers sales whether in-state or not should be taxed as part of the distant transaction tax. Every merchant and every buyer would know the tax rate because it would be the same all across the US.
States should be banned from absurd use taxes which are actually sales taxes on purchases made across state lines and such state taxes are banned because of the commerce clause. The use tax is an absurd abuse of language and legal fiction.
In this era of computers, it is not as complicated as one might believe for a vendor to put together a software solution to the sale tax rule problem.
Three more thoughts ...
1. When I lived in Hawaii, that state had a way to charge and collect their sales tax on purchases I made from out-of-state sources. Didn't seem like much of a problem to them. I lived there, so I paid their tax. Simple.
2. An audit of use tax liability would not necessarily have to reveal the actual items purchased, but only their sources. For example, if I were audited, they'd see "Amazon" on my credit card statements quite often, but they would not know the titles of the books I bought.
(2a. Fortunately, I would not be embarrassed to reveal those titles, anyhow.)
3. Anyone who wants to make the laws we all must abide by (that is, any legislator or person running for office) ought to have no qualms about revealing their online purchases, in my opinion. They're our servants, not our masters.
Taxation without representation: heck, Stan, I get that every time I make a purchase in South Dakota, since as a rural resident, I don't get to vote in any municipal election for city commissioners who set their local sales tax rate or decide how to use that money. We also pride ourselves in boosting the revenue we import from tourists, who get no say in our local and state rates. Should we limit taxes to those that we pay to entities we elect?
"In this era of computers, it is not as complicated as one might believe for a vendor to put together a software solution to the sale tax rule problem."
Computers have been around for some time and vendors required to charge SD sales tax because of some physical real or imagined connection rely only on zip codes which means rural residents end up paying city sales taxes they don't owe.
Setting up a sloppy computer system may be easy, doing it right is a bitch. In fact, SD newspapers found out what kind of a mess it is when they started off having to charge sales tax based on location of subscriber rather than on their publishing location. They soon came whining to the legislature to get it switched around so that when we in the boondocks subscribe to one of those sophisticated Rapid City or Sioux Falls papers, we also kick money into those cities in which we have no voice over use of the money.
That is the problem with all schemes and consortia that require for correct tax application complex intrusive databases.
"A distant sales tax should be applied to stocks and bonds as well."
I highly disagree.
I did a bit of checking this morning at the paper. It seems that subscribers are taxed on point of delivery. Newspapers must remit sales tax to each town papers are sent to.
Please check your facts more closely next time.