The Great Sales Tax Scam

By Nathan Barton

The great guys at Agora Financial/Laissez Faire sent this out recently:

For the record: As anticipated here [Agora Financial] Tuesday, the Supreme Court has just cleared the way for states to start collecting sales tax from online retailers.

The decision reverses the 1992 Quill decision, under which catalog retailers were required to charge sales tax only in states where they had a physical presence like a store or warehouse.

Going forward, for example, an online retailer based in Massachusetts like the home-goods website Wayfair will have to charge sales tax to its South Dakota customers. (The case was South Dakota v. Wayfair Inc.)

The justices ruled 5-4, with most of the conservative bloc joining the majority — except for Chief Justice John Roberts.

Now, don’t get me wrong. The Black Hills is a great place to live, and about as free as you can find these days in the Fifty States. But the government in Pierre stinks. While not as money-grubbing and far less bureaucratic-nanny state as, say, Colorado, or as paranoid about recordkeeping as, say, Utah, they are bad on a lot of things.

One of which is sales tax (or as South Dakota calls it, “sales and use tax”). It has one of the broadest sales taxes in planetary history. For example, even engineering and architectural services have sales tax tacked on. And those are based on where the services are provided, not the home office of the professional. And it (while not high compared to some states) has a special one-percent tax on “tourist goods and service” such as restaurant meals, motels, tour-guide services, and books. But not just tourist books, or coffee-table picture books. You have to pay it on textbooks and professional references. You are also supposed to pay sales tax on ANYTHING you buy out of state, if the other jurisdiction didn’t charge as much sales tax as South Dakota and its cities would. And while (unlike some states) only the state, municipalities, and tribes can charge sales tax, the counties and tribes can have different rules. For example, some towns exempt food items from their city tax, though the state does not.

(Colorado is an example of a weird, overlapping jurisdiction nightmare for sales taxes. Some places in the Metro Denver area have a dozen different taxing entities stealing money from them: sports districts and special recreation districts and cultural districts as well as towns, counties, the state, and probably the Pirate Roberts.)

So now, courtesy of the politicians, political appointees, and bureaucrats in Pierre, almost all the Fifty States will get to suffer. (South Dakota, by the way, doesn’t need more sales tax – in the last two years the take has increased by a good 20% despite some definitely slowing in the economy. The “reason” for the lawsuit was to supposedly protect Main Street, small town business from the predatory pricing of Amazon, EBay, and other online sellers.) (Not ALL of us, because a few states, like Montana, have no sales tax.)

Anyway, whatever form or complexity or rate of sales tax, it is just theft. “Legal” but immoral and an example of the evil nature of government. But the WAY in which it is set, collected, and used just makes its immorality the more obvious and disgusting.

I commend to our readers Ari Armstrong’s excellent article on the subject, in his Colorado Freedom Report. He brings up some very points, explaining why sales taxes are enemies of freedom and liberty.

Here are some nibbles from the article:

  • Government should not conscript private parties for government functions.
  • Government owes just compensation for burdens it imposes.
  • There should be no collection of taxation without representation.
  • The onerous burden of Interstate taxation. [Duplicating the burden that people like Ari in Colorado and my firm in South Dakota face, magnified fifty-fold (or so).

I think Ari’s summary is telling:

Of course, business owners could promote just policies for all, and no doubt at least some will do that. But, for the most part, I expect that unscrupulous business owners will conspire with unscrupulous politicians to use the sales-tax regime as yet another form of economic protectionism.

Because God forbid we actually have a free market, here in America.

Ari may or may not agree with me, but this just makes theft even more intolerable. It is like the stick-up artist not just making you go to the ATM to get him more money, but then making you help him ambush another victim.

The real solution isn’t “fair” taxation or simplification. It is ending the power of government to steal money from businesses or citizens, domestic, Stateside, or foreign.

About TPOL Nathan

Follower of Christ Jesus (christian), Pahasapan, Westerner, Lover of Liberty, Free-Market Anarchist, Engineer, Army Officer, Husband, Father, Historian, Writer.
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