Saturday, May 4, 2013

The GOP Internet Tax

Senator Mike Enzi has proposed legislation to raise taxes by 24 billion dollars. His proposal has an appealing name. “The Marketplace Fairness Act” imposes sales taxes on those who make Internet purchases. Today you don’t pay sales tax when you buy through the Internet. If Enzi succeeds, the price you pay for Internet purchases will increase by 6%.

I am not getting into the debate over whether this is a good idea. Going there avoids the discussion of what happened to the “no tax” pledge most Republicans including Senator Enzi took? That pledge tied Congress in knots for the last several years each time an effort was made to find a balanced way to reduce the deficit.

Enzi’s record and that of fellow Republicans has, until now, been consistent. Grover Norqusit, they believed, had it right. President Obama was wrong. On every vote to eliminate the old Bush tax breaks for the wealthy, Republicans blocked the road. Whether it was giving the rich greater exemptions from estate taxes, returning the income tax rates to Clinton-era levels, or avoiding severe budget cuts for the military by repealing the capital gains tax cuts, they have been a united voice for “NO.”

But now they have found a tax they like. But why is this tax good when all the others were, according to Republicans, disastrous for the economy? Curiously, there are also a lot of lobbyists and corporations that uncharacteristically have found a tax they like. Those big corporations know where to go when they want to gain a competitive advantage. They go to Congress. And that is what the “Marketplace Fairness Act” is about.

Norquist and his Americans for Tax Reform as well as the Heritage Foundation continue to believe what GOP members of Congress used to believe. If it walks like a tax and quacks like a tax, it must be a tax. Enzi and other “no new tax” Republicans claim it is not a tax increase at all. They say it only allows states to collect taxes already due. That argument begs the fact that we don’t pay it now but after it passes, we’ll pay billions in additional taxes. Isn’t that the definition of a new tax?

Local businesses have opposed other new taxes but consider this one uniquely fair. But most of the tax reform ideas Enzi and others have spent years opposing are also fair. Unfortunately fairness is rather subjective and generally means someone else has to pay it. Fairness ultimately lies in the eyes of enough senators willing to filibuster a vote. There may be good reasons to impose the new tax but let’s be honest. That is exactly what it is and it’s a regressive one at that. Unlike most tax reform proposals that these members of Congress have opposed which fall on the wealthy, this one falls more heavily on the middle class.

Senator Kelly Ayotte, (R-NH) said, “What does surprise me is that there are people who describe themselves as conservatives who are going to support this act, when regardless of how you look at it, whether your state has a sales tax or not, it’s going to put some fairly rigorous and onerous requirements on online businesses to collect taxes for other states. That’s counter to conservative principles.”

Ayotte’s colleague Senator Roy Blunt (R-M) feels differently. In a New York Times report, he said it’s not fair that local folks purchase online and avoid a tax they’d have to pay if they bought from the fellow down the street. “They (those who will pay the new tax) use the parking lot. They use the sidewalk. They benefit from police protection, and then the local merchant who pays for all of that doesn’t get the sale.”

They also use all other services federal taxes purchase as well. Apply their logic for supporting this tax to other tax reform proposals and America would have the revenue it needs to reduce the deficit while investing in education, healthcare and infrastructure.

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