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Originally published April 18 2013

Help stop the Internet tax mandate

by J. D. Heyes

(NaturalNews) If it seems like you're constantly being hit in your pocketbook by taxes and tax increases, you're right. Tax revenues are at all-time highs, but it's not enough: The president, joined by an increasing number in Congress, are seeking even more taxes, this time in the form of a new Internet tax that you should vehemently oppose.

According to the Campaign for Liberty, a Springfield, Va.-based group seeking a restoration of the founders' original constitutional intent in public policymaking, lawmakers are currently considering a new Internet tax mandate that it says "would turn online retailers into tax collectors for the state and could have a devastating, stifling impact on innovation, jobs, and online entrepreneurship."

Writing in the Daily Caller, the group's president, John Tate, appealed to Americans who are sick and tired of the tax-and-spend ways of Washington, D.C., asking them to contact their senators and representatives to voice their opposition to S. 336 and H.B. 684:

Next Valentine's Day may be significantly more expensive for millions of Americans who purchase Valentine's Day gifts for their significant others over the Internet, thanks to big-spending politicians in Washington and state capitals across the country. The first shot of the massacre was fired on Thursday, when Senator Mike Enzi (R-WY) introduced the National Internet Tax Mandate Act, S. 336, legislation allowing state governments to force online retailers to moonlight as state tax collectors.

Just what politicians need - more money to waste

Tate explained that under current federal law, as upheld by the U.S. Supreme Court in the case of Quill v. North Dakota, any business that doesn't have a "physical presence" in a state can't be forced to collect that state's sales tax on purchases made by customers. The decision was based on the realization that it would be highly impractical and, for some businesses prohibitively expensive, to become tax collectors for all 50 U.S. states. Also, the ruling prevented companies from being forced to pay taxes to states where they had no representation.

Previous efforts to impose Internet taxes have been unsuccessful because economic reason prevailed. Opponents argued then, as they do now, that failing to implement far-reaching Internet taxes is the principle reason why e-commerce has flourished, thereby becoming major sources of revenue and subjecting said companies to rising levels of income taxation (so, see, the government gets it eventually anyway).

"However," writes Tate, "big-spending governors of both parties don't think it is 'fair' that they can't get their hands on all that new tax revenue. So these governors are lobbying Congress to pass legislation giving state tax collectors the power to force Internet businesses to collect sales taxes and send a check to state governments," many of which are as broke as the federal government (because, again, they simply spend too much money).

Here are some of the reasons why Tate says a National Internet Tax Mandate would harm e-commerce growth, which could, necessarily, become a net loss for states because it could drive down revenues and even put some Internet-based firms out of business:

Such an expansive tax law would be cumbersome, difficult and expensive for e-companies to implement. The mandate "would require every business in the country to know the details of each state and locality's sales tax laws, thus creating a different pricing structure for each customer depending on where they live," Tate writes. It would force companies to calculate the amount of taxes they would owe each state and locality so they could send them what they owed. Who benefits most? Well, the states and localities may get a new source of revenue (or not - depending on the overall net effect of e-commerce activity), but tax accountants would certainly see a boost in business. Further, compliance will be costly, and who pays when a business' costs rise? The consumer.

Major new sources of revenue for governors would lead to more unhealthy spending habits. "For some governors," says Tate, "this legislation's introduction is like receiving a big box of chocolates from their congressional sweethearts." But you can't go on a needed budgetary diet by gorging yourself on new tax revenue. Spending likely would not decrease, meaning states like California, Illinois and New York, with mounting budget deficits and major budget challenges in the future, barring efforts to seriously cut benefits and spending, will never adopt the measures necessary to reform entitlements, lower expenditures and make their way back to the path towards fiscal health.

"Rather than proposing to use the increased revenue to reform government, however, many governors are already salivating over the new spending they can finance with this money," writes Tate.

Internet taxes will stunt the growth of e-commerce. Taxes by their very nature are punitive, but the U.S. tax code - and the codes of many states and communities - are excessively so, and a new Internet tax mandate will only make the business climate worse.

"At a time when the U.S. economy is suffering from big-spending policies imposed at all levels of government, it makes no sense to hamper the most dynamic sector of the American economy with new taxes," Tate says. "The costs of complying with the National Internet Tax Mandate could force some small Internet retailers out of business. Large businesses, like, may be able to absorb these increased costs, but what about the small startup that could be the next American success story?"

There is the constitutional angle as well. Tate notes that an Internet tax "flies in the face of the original purpose of the Commerce Clause..." For one, "contrary to modern political thought," the clause was never intended to give Congress unchecked regulatory power. Rather, it was designed to enable free trade among the states by preventing states from imposing onerous, prohibitive rules or taxes on out-of-state businesses.

"The National Internet Tax Mandate flips the Commerce Clause on its head," Tate notes.

What can you do? Start here by signing a petition to stop the Internet tax mandate.

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