Tax competition, as I have explained to the point of being a nuisance, is an important restraint on the greed of the political class. Simply stated, politicians are less like to over-tax and over-spend if they know that geese with the golden eggs can fly across the border.
This is mostly an issue in the world of international tax policy, but the same principles apply for sub-national governments inside a nation.
State and local governments should compete with each by offering the best fiscal climate. Sadly, just as high-tax nations such as France and Germany are trying to hinder global tax competition, high-tax state governments are seeking to undermine fiscal rivalry inside the United States.
More specifically, they want to create a state sales tax cartel that would allow governments to force out-of-state businesses serve as deputy tax collectors. Greedy politicians are fearful that online shopping deprives them of revenue, so they are pushing for a privacy-threatening database that will enable them to track and tax these transactions.
I explained this issue last week for a standing-room-only audience on Capitol Hill.
The entire discussion is posted online, including the very astute observations of my former Heritage Foundation colleague, Adam Thierer, now at the Mercatus Center.
Investor’s Business Daily also has opined on why this is a bad idea, but if you want to get really worried, the clowns at the United Nations want to power to tax and regulate the Internet.
[…] I agree, but this is why I’m against the so-called Marketplace Fairness Act. That legislation would allow state governments to tax outside their borders. […]
[…] I agree, but this is why I’m against the so-called Marketplace Fairness Act. That legislation would allow state governments to tax outside their borders. […]
[…] are greedy and they’re willing to prevaricate. They want more and more revenue and they don’t want to face competitive pressure that might limit their ability to extract more money that can be used to buy […]
[…] more information, here’s my speech to congressional staffers from […]
[…] principle” is at the core of the battle over the so-called Streamlined Sales Tax Proposal, a scheme by certain state governments to impose destination-based tax laws on out-of-state […]
[…] In other words, I like the fact that borders limit the power of government. It’s why I don’t like global schemes to undermine tax competition (why should Swiss banks be required to enforce bad U.S. tax law?), and it’s why I don’t like the so-called Marketplace Fairness Act (why should merchants in one state be required to enforce the sales taxes of other states?). […]
[…] the so-called Marketplace Fairness Act are using a destination-based scheme in hopes of creating a nationwide sales tax cartel so that states with high rates can make it much harder for consumers to buy goods and services […]
[…] to hinder consumers from buying goods and services from states with low (or no) sales taxes. Again, their goal is to cripple tax […]
[…] that the so-called Marketplace Fairness Act, which is designed to undermine tax competition and create a sales tax cartel among American states, uses the same “destination-based” model as the […]
[…] the kind of “destination-based” tax regime mentioned above. I explain that issue in this presentation on Capitol […]
[…] By the way, everything written by McCaughey and Hatch also helps to explain why we should resist privacy-destroying schemes such as the Internet sales tax cartel being pushed by greedy politicians. I know I wouldn’t want all my online purchases in a database […]
[…] some politicians want a government-empowering, privacy-destroying scheme to let state politicians impose taxes on online sales that take place outside their […]
[…] some politicians want a government-empowering, privacy-destroying scheme to let state politicians impose taxes on online sales that take place outside their […]
[…] fight is really about whether a state government has the right to force out-of-state merchants to act as deputy tax collectors. If you believe that borders should limit the power of governments, the answer is […]
[…] have mentioned the huge privacy risks that will be created if politicians succeed in imposing an Internet sales tax cartel. Such a system will require a database of every online purchase and it will be accessible by […]
[…] have mentioned the huge privacy risks that will be created if politicians succeed in imposing an Internet sales tax cartel. Such a system will require a database of every online purchase and it will be accessible by […]
[…] if you’ll allow me to briefly digress, the same danger exists if politicians create the huge tracking-and-monitoring database that would be necessary if state politicians get the authority to tax out-of-state Internet […]
[…] if you’ll allow me to briefly digress, the same danger exists if politicians create the huge tracking-and-monitoring database that would be necessary if state politicians get the authority to tax out-of-state Internet […]
[…] By the way, everything written by McCaughey and Hatch also helps to explain why we should resist privacy-destroying schemes such as the Internet sales tax cartel being pushed by greedy politicians. I know I wouldn’t want all my online purchases in a database […]
[…] the way, everything written by McCaughey and Hatch also helps to explain why we should resist privacy-destroying schemes such as the Internet sales tax cartel being pushed by greedy politicians. I know I wouldn’t want all my online purchases in a […]
[…] the fight is really about whether a state government has the right to force out-of-state merchants to act as deputy tax collectors. If you believe that borders should limit the power of governments, the answer is […]
[…] the fight is really about whether a state government has the right to force out-of-state merchants to act as deputy tax collectors. If you believe that borders should limit the power of governments, the answer is […]
[…] For more information on why a sales tax cartel among the states would be a bad idea, here’s my short speech to an audience on Capitol Hill. […]
[…] you saw my speech to Capitol Hill staff on the topic, you know I’m strongly opposed to schemes that would allow greedy state politicians to impose […]
[…] government may not have invented the Internet, but it sure is anxious to tax it, with everyone from state politicians to U.N. bureaucrats trying to stick their hands in the cookie jar. Rate this:Share […]
[…] Should States Be Allowed to Tax Outside their Borders, Particularly if It Means a Database of Your O… […]
I’m no fan of taxation by any means. Having said that let me comment on this issue giving singular focus on the sale of physical goods (as opposed to downloadable)
Commerce based on the sale of a physical good is generally considered taxable under our current, arguably foolish mindset. As such, the use of the internet to facilitate the financial portion of the transaction does not negate the reality that a physical products is transferred from one entity to another and as such should be subject to the taxation of the state of origin just as if the purchaser had guided his horse and buggy across state lines to make the purchase in person.
In this manner states would be forced to truly compete to lower their overall sales tax or other states will steal their business by giving their own citizens a pricing advantage.
[…] Should States Be Allowed to Tax Outside their Borders, Particularly if It Means a Database of Your O… […]
Hope in one hand and defecate in the other and you end up with a problem that stinks… even if you change hands.
“Why should an American company that pays the 12.5% Irish corporate tax also pay the American Tax?”
Because we don’t want the American company to create jobs overseas in the first place. Because we think that we can wall in our corporations inside American borders and then ratchet up our overall taxation to the same levels as other nations, but maintain the incentives to produce six times more than the world average and thus maintain our six times worldwide standard of living. We think that America’s success has, and will, continue to be pre-ordained by the forces of destiny. We don’t think that America has prospered because of its aberrant individualism but in spite of it. So we think that copying the rest of the world is a path to even greater prosperity. We think that the Average American under French incentives to produce will be an indomitable juggernaut of competitiveness in the 21st century.
In short, we believe in HopNChange. We HOPE that CHANGE to French incentives to produce will have little effect on our prosperity.
You cannot legislate the poor into freedom by legislating the industrious out of it.
You don’t multiply wealth by dividing it.
Government cannot give anything to anybody that it doesn’t first take from somebody else.
Whenever somebody receives something without working for it, somebody else has to work for it without receiving.
The worst thing that can happen to a nation is for half of the people to get the idea they don’t have to work because somebody else will work for them, and the other half to get the idea that it does no good to work because they don’t get to enjoy the fruits of their labor.
Adrian Rodgers 1984
The incentives to produce will be hammered and the incentives to indolence will be augmented – just as three billion emerging world competitors see their incentives to produce finally increasing…
The writing is on the wall Americans… you wanted it, you’re getting it.. the journey to decline is just beginning…
Great talk Dan! It’s nice to hear you talk about your specific field of expertise.
I am an accountant in business for 50 years, yes I am an old fart
It’s all about the money
From the local, state and federal level no matter how much money they collect it never reaches what your elected leaders want to spent for what you don’t want, so why do you elect them, give me an answer and I will win the lottery. I think you just want to elect dumber than you so you can complain.
If you paid 99.9% in taxes and had nothing this also would come up short.
You gave up your rights when you formed groups and elected leaders millions of years ago, this was not a bad thing.
So much for the details, this is what I have done for 50 or more years but as long as your wonderful elected leaders make you respond to the the details then you can’t see the forest and you will always lose
They are trained in human behavior and you an’t
Have a good day.
[…] Should Sates Be Allowed to Tax Oustide their Borders, Particularly if It Means a Database of Your On… […]
Is there even the slightest chance that the bread-and-circus-providing-class will stop this insanity? Will the “Golden Goose” be reduced to a pile of gnawed bones and a memory before they and their zero liability voters figure it out? What manner of expediency will prevail for the “duration of the crisis”? How hard will our current “soft” tyranny become? The answers I see in our future are NOT pleasant ones.
“Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.”
William Pitt