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May 8, 2013

Another Boot on Your Neck

Kevin E. Dayhoff

On Monday the U.S. Senate voted 69-27 for the Marketplace Fairness Act, which allows states to collect sales taxes on certain online purchases.


It was only a short time ago when Marylanders learned that the government will soon tax the amount of rain that falls on your property.


Whether it falls from the sky; no matter if it moves or flies; be it the air we breathe, or it arrives by sea, the government will tax it.


In recent years Maryland has increased the sales tax, income tax, the tax on gasoline, alcohol and tobacco…It was just a few years ago that Maryland decided to tax your visits to the bathroom with the ‘Flush Tax’ – the Chesapeake Bay Restoration Fund.


Ever since the beginning of our current economic downtown in 2007, government has exhibited what can only be described as a pathologically-psychotic obsession to increase taxes.


In turn, the sales tax idea has been debated for several decades. The universal-marketplace tax act passed Monday, Senate bill 743, in essence overturns a 1992 Supreme Court ruling that determined that sales made by out-of-state sellers are not to be subjected to sales tax if the business does not have a sufficient brick and mortar physical presence in a given state.


In part, the ruling was a reflection of the reality that it was simply far too difficult for businesses “to abide by so many different tax jurisdictions and rules,” according to multiple news stories, including that of Hadley Malcolm, of USA Today.


Back in 1992, the pre-occupation of the government was, more or less, with mail-order catalog sales. Today, USA Today reports, “online shopping has grown into a $226 billion-a-year business.” And the government wants a piece of it.


Most people readily and easily agree with “proponents of the Marketplace Fairness Act (that) say requiring online businesses to comply with the same rules as bricks-and-mortar businesses is long overdue.”


The article in USA Today quotes David French, senior vice president of government relations at the National Retail Federation, “Not being able to compete on this is a frustration for retailers… (Avoiding sales tax) may not be a primary reason customers shop online, but it's one of them.”


Furthermore, “The issue pits retail behemoths such as Walmart and Amazon against small online sellers such as those on eBay in a fight for price and industry dominance,” reports USA Today.


“Those in support of the bill, which include Walmart, Amazon and Target, argue they're at a 5% to 10% price disadvantage by having to charge sales tax.


“States argue they're missing out on much-needed revenue. Last year, states could have collected more than $11 billion in online sales tax revenue, according to a study by the University of Tennessee.”


An article in the Los Angeles Times reports: “eBay Inc. has remained strongly opposed….(I)nfluential activist Grover Norquist of Americans for Tax Reform, which asks lawmakers to sign a no-new-tax pledge, (says) the so-called Marketplace Fairness Act is, in effect, a tax increase. And his group, along with some other conservative activists, is pushing House members to reject it.”


If the proposed legislation should also be approved by the House of Representatives, it will “leave many small online sellers with the task of figuring out how to manage collecting and remitting sales tax to nearly every state,” observes USA Today.


“The act would also require states to simplify their tax codes and provide retailers the software to assist in tax collection at no charge.”


Yeah, right. That will never happen. State taxing bureaucracies are simply not in the customer service business. As for businesses that try to do the right thing, the motto of most state tax collection offices is ‘no good deed goes unpunished.’


Let’s be clear, the proposed Internet sales tax is salt poured in the wound of an endless parade of new or increased taxes. However, the 800-pound gorilla in the room, of which most business owners are not willing to say on the record, is that the main impediment to collecting sales tax for countless states and local jurisdictions throughout the country, is the nationwide understanding that more often than not, the sales tax bureaucracies for most states are extraordinarily unpleasant and difficult.


Most state retail sales tax divisions have the warmth and customer service demeanor of a water moccasin; the knowledge, skills and ability of the motor vehicle administration or the U.S Postal Service coupled with an approach to customer service that makes Verizon and Comcast look like Dr. Love – the late Leo Buscaglia.


I’m not sure what it is like to do business today; but when I did business with the Maryland Retail Sales Tax Division from 1974 to 1999, it was truly some of the most horrid and unpleasant moments of my life as a result of rules and regulations that simply had no resemblance of doing business in the real world.


The forms, reporting mechanics, regulations and procedures were byzantine and impenetrable and the bureaucrats that enforced the laws were truly some of the unhappiest misanthropic people on the planet whose only purpose in life was to punish you for being a little worm that dared to run a business in Maryland.


Remember the motto of Maryland state government toward small businesses is that all business owners are criminals and the purpose of the state bureaucracy to prove it.


In the bigger picture, as long as businesses in the United States continue to face uncertainties in economic policies and the overwhelming burden of one tax increase after another, job creation will lag, Main Street will continue to flounder and hard working families will suffer under the heel of the boot of the government.


Okay, am I supposed to sign this in blue ink or black ink – – on the pink copy or blue copy?


. . . . . I’m just saying. . .


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