Really Bad Precedent: Allowing Governments to Tax Non-Constituents
Indeed It Is
The Supreme Court is currently considering South Dakota v Wayfair. A case debating whether or not state and municipal governments can collect their respective sales taxes - on non-resident business and people who have the temerity to complete a transaction in their jurisdictions.
President Donald Trump is on this absolutely correct - in one sense. Online retailers like the case-cited Wayfair - do have a tax-less advantage over brick-and-mortar stores in localities that impose sales taxes.
If you live in one or more sales tax jurisdictions and you shop brick-and-mortar - you pay the sales taxes. If you live there and shop Wayfair - you do not necessarily render unto Caesar. (Some online companies - Amazon, for instance - collect many of the sales taxes in much of the nation.)
Not paying sales taxes makes shopping online - (that much) more attractive. And brick-and-mortar retailers - have been understandably screaming bloody murder.
Unfortunately, they have expressed their distress and marshaled their forces - in precisely the wrong direction.
The correct answer - is to remove the sales taxes from brick-and-mortar retailers. Thereby rendering even the playing field. Oh: And less money for government - means more money for shopping.
These retailers are instead demanding the sales taxes that damage them - also be imposed upon their online competitors.
Misery loves company, I guess. But the miserable - should much prefer having their misery ended. Happiness loves company too.
But as big a problem as all this is - it ain’t the biggest problem presented here.
The biggest problem would be the advent of governments being able to tax businesses and people - who do not live in these governments’ jurisdictions.
Taxation without representation, anyone? This would be a whole new level of obnoxious.
There are roughly 1,100 governments around the country that impose a sales tax. Imagine green-lighting all of these greedy mandarins to tax people…who can’t vote them out of office or do anything else politically about it.
The sky wouldn’t be the limit - it would be the floor of the new levels of tax imposition.
In short - this is a really terrible idea.
Which is exactly why Maryland’s Democrat-dominated legislature - is trying to do something obnoxiously similar.
Maryland is already the most-taxed-state in the nation. Their constituents are thus bled almost entirely dry. So when presented with the idea of taxing non-residents - Maryland of course ran with it:
“They have just passed a huge new tax increase. And done so - under the false flag of business tax ‘reform.’ Behold SB 1090.
“Democrat business tax ‘reform?’ We should know better - and so should (Maryland Republican Governor Larry) Hogan. Democrats don’t like business - so why would their business tax ‘reform’ do anything other than punish business?
“And here’s the obnoxious new wrinkle Democrats have added: SB 1090 increases taxes on businesses…not even incorporated in the state….
“The Democrat tax increase will be on many businesses - as much as 10%.”
A whole new way for governments to tax businesses - whose people (because businesses are just people incorporating) can’t do anything electorally about it.
I suppose you can give Maryland credit for ingenuity.
What Governor Hogan shouldn’t do - is give them his signature on the legislation.
Hogan should instead veto the living daylight out of it.
I do not consider governments coming up with new ways to tax businesses outside of their jurisdictions - “reform.”
Neither should Hogan.
This first appeared in Red State.