More from: PC Magazine. John Dvorak

“On-Line Sales Tax Legislation” HR 5660

There is no “New Internet Tax” — at least not in HR 5660. This article by John C. Dvorak appeared in a blog from PC Mag (http://www.pcmag.com/article2/0,2817,2367551,00.asp). It is worth confronting at this time because it represents one serious problem with the blogosphere — laziness. It took me under five minutes to check this out, but a professional reporter did not invest five minutes of his time to do the same.

For one thing, HR 5660 is included in HR 4577. For another it is not news, it happened in July. The Federal government does not get any money as a result of this legislation. And even more importantly, all it does is establish a simplified standard format for the State forms used to collect Sales Tax from retailers so that on-line businesses don’t need to learn 50 different sets of rules. Mr. Dvorak writes:

A new piece of legislation claims to level the playing field between Internet retailers and brick-and-mortar stores, but this “fairness” bill is anything but.

Internet stores and direct mail operations have long been targeted by money hungry legislatures as potential sources of more tax money for government coffers. There’s always a bill in the works trying to tax Internet stores. Over the years, these proposed laws have been discovered early on, forcing the tax mavens to regroup, over and over again.

They’re at it again, with a bill called The Main Street Fairness Act (HR 5660). This time the bill is cloaked in a cloud of last minute darkness. The argument is that the poor brick-and-mortar stores are being killed by Internet companies, because the latter don’t have to charge tax if they are out of state. Of course! This supposed advantage is negated by shipping costs, but that is seldom brought up. People generally buy things on the Internet when they are not available locally—or when they’re much cheaper online. Tax has little to do with it. This rationalization is meant to cover up the fact that HR5660 is just a money grab.

I looked up this legislation and read through a summary section by section and a good part of the actual law (http://commdocs.house.gov/reports/106/h4577.pdf). Dvorak is wrong: the bill is what Bill Delahunt says it is (http://delahunt.house.gov/2010/07/delahunt-introduces-main-street-fairness-act.shtml) — a mechanism for using the same form for every State (instead of 50 different sets of laws and related paperwork).

All the on-line retailers I use already collect sales tax: this bill created no new tax, only a means of replacing the myriad different forms and rules with a single form so retailers can easily accommodate all the States without a herculean effort to analyze and comply with 50 different laws.

Sales tax goes to the State in which the consumer lives, to pay for the consumer’s needed police, fire, school, and other expenses. If you live and are protected by the police in Washington, then you pay tax to Washington, not California, for your own government, not someone else’s. If you do not like your own State government’s sales tax, then you need to change your State government.

Mr. Dvorak, I like reading your column, but you need to take time to read the legislation before you blog on it. Going off half cocked degrades your credibility.