Doctor Recommended Reading

MONDAY MORNING MEMORANDUM
By Assemblyman Ray Haynes
July 31, 2006

A Streamlined Sales Tax
Equals A Bloated Bureaucracy

One of the things I enjoy most about this job is the opportunity to watch how the ruling class in our society, that is the politicians, the bureaucrats, and their allies in the private sector, try to dupe people into giving them more power.

Case in point—there is an effort nationwide, in which California is participating, to develop the Streamlined Sales Tax Project (SSTP). The SSTP would force businesses that do mail order and internet sales to collect sales taxes from citizens of other states. SSTP would require Congress to enforce the system and would use an organization called the Multistate Tax Commission to collect and audit the sellers. Congress is being asked to force all sellers, even if they operate in a state that does not participate in the SSTP to collect taxes from buyers in states that do participate.

Today, these sellers need to know the sales tax laws in the states where they actually have a business. If the seller is not located in the state, no tax is due from the seller. The buyer owes a use tax, and it is the responsibility of the state in which the buyer lives to collect that tax from the buyers.

The states are whining. If states actually try to collect this tax from buyers after the purchase is complete, buyers will then know the cost of the tax, and probably balk at paying the high sales tax in those states with a high tax. If these states can force a few sellers (whose political power is limited) to collect the tax, buyers will be less aware of the true cost of government in their lives.

The National Retail Federation (NRF) and the International Conference of Shopping Centers (ICSC) are also whining. They think that internet businesses are getting a competitive advantage from not having to pay the sales tax. Of course, the tax is still due, so the only thing the SSTP will do is make collection of the tax “more efficient.” Hence, the name “streamlined sales tax.”

The problem is that it will make sellers who ship their product responsible to know the sales tax laws in all fifty states, and in the nearly 10,000 jurisdictions within those states. The bookkeeping nightmare that will result from this system will put a lot of these internet and mail order businesses out of business. That is more than likely why NRF and ICSC support the SSTP. SSTP will give the Multistate Tax Commission, which is an unelected tax collection agency, almost plenary power to determine the tax regulations which govern these businesses, and then allow these unaccountable bureaucrats the power to raid these businesses to collect the tax.

Business groups like the NRF and the ICSC claim it will “level the competitive playing field” by requiring shipping businesses to pay their “fair share” of the taxes. It does so, however, by raising taxes and regulations on their competitors.

SSTP is a disaster in the making. It will strengthen unaccountable bureaucrats, protect high tax states from competition with low tax states, and require businesses to become the financial agents of the welfare state. It will streamline nothing except the tax collection process, and it will allow government once again to intrude into more areas of our lives.

Worse than all of this, the bureaucracy has willing allies in the private sector who want to use government to squelch their competition, to the detriment of lower prices, better products and more convenience to the consumer. It is the worst of all possible worlds for you and me, and the best of all possible worlds for the ruling class, which means it will probably come to pass in our country, the beacon of freedom for the entire world.