Posted 12:36 AM by Douglas
COMMENT--- SD Governor Janklow Just Can't Ever Seem To Tell Quite The Whole Truth

On Friday Feb 09, 2002, Gov. Janklow was blathering away in his usual non-stop rattle. He had been asked to comment on a state internet tax. At this stage that is an attempt to simplify and coordinatie the multiple sales taxes, use taxes, etc from small podunks to large metropolitian to completely rural areas in some 30 states involved in a consortium. Anyway. Wild Bill was trying to make the case that having SD companies being required to charge sales taxes to SD residents while out-of-state companies do not charge SD sales tax. He gave the convenient example of Gateway Computers here in SD and Dell in Texas.
Why, if somebody in SD bought a $1000 computer from Gateway, they would have to pay $40 to $60 of SD sales tax; but....horror of horrors, if Joe Tightwad in SD decided to buy from Dell via internet to Texas, he would not have to pay that egregious tax. Well, he did not say it was egregious, but it is...anyway. All you have to do to test this is log onto Gateway and Dell and then go through the ordering process and plug in a SD zip Code. Ka, Plink, Ka Thunk...you will find that Gateway Charges the SD sales tax and so does Dell but Dell not only does that, but has a database sophisticated enough to determine if you have a ZIP code with multiple tax rates and asks if you are in a city or in a rural area not subject to the city sales tax.

Wild Bill just can't resist making one of his mediocre stories a little less mediocre.

In any case, the complexity and privacy intrusions of any state internet sales taxes strongly suggests that if internet sales are going to be taxed, they should be taxed by the federal government for the states with the collected taxes on remote transactions returned to the states on the basis of population. That removes the
requirment for huge databases of Zip codes and exact addressses tied to local and state sales taxes. The federal tax collected for the states would be the same all across the country on any remote sale whether it was internet, mailorder or whatever. End the State legal fraud of collecting "use" taxes, etc. I suggest
using some kind of a weighted average of the state's sales taxes. That rate would apply no matter where the sale originated, who was the seller, or who was the buyer. Returning the taxes on the basis of population eliminates need for huge databases.

No more need for states to invent some kind of legal mousetrap to make an end run around the commerce clause, no court cases trying to prove the state's tax mulcting is not an onerous burden on interstate commerce, etc.

But, states and state revenue agencies are so interested in enlarging their revenue agencies and preserving their assumed right to be the only agency collecting sales taxes that they do not care how much complexity they generate for consumers and all businesses. While they talk about being "progressive" and desirous of nothing more than some fantasy of a level playing field for business, they are overlooking the best and simplest way to do it.

Internet libertarians automatically go into "no internet tax" mode and the standard antitax litany characteristic of libertarians who hate all govenrment except that which bails out their corporations. I assume some kind of tax on internet sales is inevitable. Rather than have states make a godawful mess of it, they should "hire" the federal government to do it consistently across the US. They should not limit it to books, computers, software, sexy lingerie, or Bibles or whatever.. it should cover all remote transactions including sales of stocks and bonds, insurance policies etc. via internet, mail, across state lines or even across a state if via mail or internet.

Real simplicity and fairness will not come from states cobbling together a tax consortium and rules but by utilizing the national authority of the federal goverment.

And, that is why state internet and all state remote taxes should be fought. But, the primary reason is even more fundamental-- It is not a tax that as claim they are "loosing", it is a tax they should never be collecting. But, the real world fiancing problems of state and local governments means they will try to hop, skip, and jump over that argument with enough smoke and mirrors to bafffle firemen and magicians -------- Douglas Wiken