Friday, July 20, 2012

Coming Soon – An End to All That On-Line Buying with No Sales Tax

Amazon Has Thrown in the Towel – and Now Republicans Are Also Tossing in the Terry Cloth

Republicans hate taxes, and even more hate the thought of raising taxes.  Oh they like government spending well enough, they just think no one, least of all the wealthy, should have to pay for government services.  So until recently Republicans were adamant about not requiring on line merchants to collect sales taxes and remit those funds to the states.

Now that has apparently changed, and Republican Governors are championing the idea that Congress should either pass a uniform law for all states, or give states the right to force internet sellers to collect and remit sales taxes.

Republican governors, eager for new revenue to ease budget strains, are dropping their longtime opposition to imposing sales taxes on online purchases, a significant political shift that could soon bring an end to tax-free sales on the Internet.

Conservative governors, joining their Democratic counterparts, have been making deals with online retail giant  to collect state sales taxes. The movement picked up an important ally when New Jersey Gov. Chris Christie—widely mentioned as a potential vice-presidential candidate—recently reached an agreement under which Amazon would collect sales taxes on his state's online purchases in exchange for locating distribution facilities there.

Mr. Christie called taxation of online sales "an important issue to all the nation's governors" and endorsed federal legislation giving all states taxing authority.

There are two stated reasons why Republicans have made the change.  One is an issue of fairness.  Brick and mortar sellers are at a disadvantage to on-line sellers and while we all enjoy making sales tax free purchases, the truth of the matter is that it is unfair.  The second issue is money.  State governments have decided they want the revenue.

Republicans' general opposition to new taxes, particularly broad-based ones, led GOP governors to avoid considering the sales tax, even as its potential value to state coffers grew. In most cases, the no-new-taxes sentiment trumped pleas from in-state retailers that they would have to lay off employees or close their doors if their online competitors kept undercutting their pricing.

"But the current economic environment made states start looking harder at this for new revenue that costs them nothing," said Sandy Kennedy, president of the Retail Industry Leaders Association.

But the real reason, the unstated reason why Republican Governors now want to collect sales taxes from on-line purchases is politics.  These Governors have discovered that contrary to their ideology, voters really like government services like education, transportation, health care and public safety.  And guess what, all those conservative Republicans elected in 2010 are going to be facing the voters soon and they need goodies to hand out to stay in office.

So yes, these Republicans will push for higher revenues and higher spending in order to get re-elected.  Then in 2015, back to the old ways, cut services for the poor and taxes for the rich.

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