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Don’t Expand Sales Taxes, Abolish Them

Conservatives are against new taxes—unless they are for them. The unprincipled conservative approach is most recently illustrated by a February 14 release from the American Conservative Union (ACU) urging Congress to sanction Internet sales taxes.

In the release, ACU president Al Cardenas says the federal government should allow states to impose sales taxes on out-of-state businesses to “level the playing field” with in-state business. (Most but not all states impose a sales tax.) Cardenas endorses the so-called Marketplace Fairness Act to accomplish this.

To buttress his position, Cardenas appeals to the authority of a 2001 article by William F. Buckley (no surprise) on the matter. In this article, Buckley acknowledges the “collectivist” motive of letting “states come in with a transfer tax.” However, Buckley argues, without the requirement to pay a sales tax, “out-of-state businesses are, in practical terms, subsidized.” But Buckley’s claims on this point are complete nonsense: The government does not “subsidize” a business by declining to forcibly confiscate wealth from it.

Buckley is right about one thing: “If the advantage of tax-free Internet commerce marginally closes out local industry, reforms are required.” Indeed they are. But what reforms comport with individual rights? That, of course, is a question that never occurred to Buckley or his ilk.

To the degree that sales taxes finance any government activity not directly related to operating local court and police functions, they not only violate people’s rights to control their own wealth and trade with others on a voluntary basis; they also do so for purposes that the government has no moral right to engage in at all. (Ultimately, governments can and should be financed fully voluntarily.)

The sales tax violates the rights of business owners in additional ways. It essentially forces businesses to serve as the government’s tax collectors, at the businesses’ own expense, with noncompliance punishable by criminal penalties. A sales tax on out-of-state businesses does this without even any pretense of offering the business local government services; a company in California does not benefit from the services provided by the government of Wisconsin.

Thus, the entire sales-tax scheme is obscenely unjust and a violation of the rights of business owners. Sales taxes should be abolished, not expanded.

Thankfully, another organization, FreedomWorks, has taken a principled position, demanding, “Congress, Leave Online Businesses Alone!” FreedomWorks continues:

The misnamed Marketplace Fairness Act would subject all online purchases to sales tax, a requirement that could devastate the already-thin profit margins of small retailers. The bill also fails to streamline conflicting tax structures, forcing small businesses to individually research the tax law for each purchase made—a major problem for many large corporations, to say nothing of smaller organizations. If Congress really wants to level the playing field, they should cut taxes on brick and mortar stores rather than raising taxes on small businesses during a recession.

The Internet provides a practical avenue for individual sellers to offer their products at a reasonable price—don’t let Congress destroy their success with taxes!

Shame on the American Conservative Union for endorsing rights-violating Internet sales taxes. And kudos to FreedomWorks for taking a principled stand against such taxes—and for individual rights.

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