Congress is once again considering allowing taxes on Internet access and interstate ecommerce transactions. In addition, they are also considering a way to get around that pesky little clause in the Constitution that forbids the taxation on state exports (Article 1, Section 9), which has generally been read to prohibit state sales taxes from being imposed on items purchased by buyers physically located in different state.
I'm no lawyer of course, but the challenge of imposing a state sales tax on interstate transactions seems to be more of a rhetorical problem than a logical one. After all, if the words of the clause, "No Tax or Duty shall be laid on Articles exported
from any State" are interpreted strictly, it seems that no item that was ever exported from one state to another could ever be taxed in any way.
However, that was never the intent of the clause, and that is not how it is being interpreted. The matter now hinges on the ruling of the Supreme Court, whose interpretation of the clause (Bellas Hess v. Illinois and Quill v. North Dakota) is currently binding.
Before jumping on one bandwagon or the other and writing your congressman, I urge you to do your research.
Most people using this medium regularly, I'd wager, would balk at a tax that would force them to pay more for their Internet service or goods they buy online. I understand their reticence. Once a power to tax has been ceded, it is rarely, if ever, given back willingly.
On the other hand, the states have a valid point of view, too, especially since, as more and more transactions are taking place online, they lose access to revenue through no fault of their own.
They can't force bricks-and-mortar companies to provide better customer service (and thus ensure more traffic is driven there), and if they try to collect it directly from income of a company operating from within their state, at some point the company will seek to base its operations in another state, which will also reduce the net revenue generated for the state, as well. It's a tough situation for them to deal with.
My view is this:
The Internet is a portal to not only commerce, but information vital to the education of the people, which is an essential component to the maintenance of a free society. Therefore, taxation on the access to information should never, ever be allowed. Thus, Congress should ban all such taxes to that access, to the extent that its enumerated powers concerning interstate commerce allow it.
However, our understanding of the definition of an interstate transaction needs to be updated to include the technology and processes that have emerged since 1789. Thus, states should be allowed to impose a tax on ecommerce transactions, even if the buyer orders from another state. They just shouldn't do it. Not yet, anyway.
The Internet makes many efficiencies available in personal, corporate, and government consumption that bricks-and-mortar stores do not have and cannot get. Making use of these efficiencies is in our national best interests, but it will take some time before we can realize them.
Companies still need to figure out how to connect with and sell to consumers effectively over this medium before we will see a meaningful reduction in price that naturally results from free competition among similar companies to enact more cost-effective models of distribution.
Until then, lay off the taxes, guys. Give us a break. Using this medium for commerce is still in its relative infancy. People have been perfecting the offline business transaction since 100,000 B.C. The least you could do is give us another 20-30 years to figure this thing out. - Cam Beck
Laws of Government According to Ronald Reagan:
"If it moves, tax it. If it keeps moving, regulate it. If it stops moving, subsidize it."
