Last week, Amazon began collecting sales tax on purchases delivered to Ohio. Predictably, politicians the state over applauded the move because, well, politicians, especially leftist ones, love taxes.
These are the same politicians who promote the inappropriately named Marketplace Fairness Act of 2015. It is only fair, their warped reasoning goes, that online retailers must act as the state’s tax collector because brick-and-mortar stores have to do so. It somehow does not enter their minds that when faced with an injustice, the answer is not to spread that injustice to others. Instead of expanding the injustice to the online retailers, why not cure the injustice against the brick-and-mortar stores?
Unfortunately, the argument over Internet sales tax has less to do with fairness and more to do with a money grab in order to facilitate bigger government.
The problem, at least to those lovers of big government, is that a state only has the power to enforce the laws within its own borders. The long arm of Ohio law does not expand beyond the state line.
States charge a sales tax to collect revenue. The higher the tax, the larger the incentive for consumers to avoid buying locally. So they turn to the Internet. That angers the politicians. So they want to exercise control over the online retailers who exist in other states. But these merchants have no voice or representation in the state. In other words, it would be taxation without representation.
This would be akin to someone from Ohio going to Colorado, legally smoking marijuana, and then getting arrested once he or she returns to Ohio.
Now, in the case of Amazon, it has facilities in Ohio so the government has the power to force the retailer to do its dirty work. But should it?
The politicians want online retailers to collect state taxes because they have irresponsibly emptied the public fisc. But that is a larger undertaking than it seems.
There are thousands of taxing jurisdictions in the United States. So many that no one is really sure how many, though the best estimates seem to be around 10,000. Every year, hundreds of changes are made to these taxing jurisdictions. It would be a massive and expensive undertaking if states were allowed to force online retailers to collect sales taxes. While Amazon might have the resources, smaller online retailers would be unlikely able to comply.
What taxing online retailers would do is require online and other remote sellers to collect the sales tax and send it to the appropriate tax jurisdiction. What this means is that the seller would have to ascertain the purchaser’s location, find the appropriate tax rules and regulations for that location’s given tax jurisdiction, collect the tax, and submit it to that distant authority.
That is a huge burden, not only on the retailer, but also on the economy.
The politicians will claim that levels the playing field. How can it? A brick-and-mortar store only has to worry about one tax rate and the taxing authority is geographically close.
In the end, the real travesty here is that the sovereign forces merchants, brick-and-mortar or otherwise, to act as deputy tax collectors. If the state is going to tax the consumption of its residents, it should really be the one to collect the tax.
Is it more convenient and efficient for the state to use private merchants as tax collectors? Of course. But liberty is not about governmental efficiency.
If the state had to collect its own taxes, it would be a burden on the state. Good. Collecting taxes should be a burden and that burden should be carried by the government, not by private merchants.
Better yet, stop taxing retail transactions. Consumption taxes are an illegitimate imposition into a private commercial transaction. Instead of bringing the force of law against online retailers to force them to collect taxes on behalf of the state, we should really be ending the burden the government places on local retailers by turning them into deputy tax collectors and increasing the amount of money we have to spend on goods.
Now that is what I would rightly call marketplace fairness.