Mandeville, LA – Exclusive Transcript – What is this idea that we need a permission slip from the Senate and then from the Congress in order to pass this tax? As I said, follow the money. Where’s the money going? The states don’t want to do this because they know that if they do it, you’re going to revolt. That’s why we have this story in the form that it is today. Check out today’s transcript for the rest…
Begin Mike Church Show Transcript
Mike: The CNN Money story is “Senate to vote on proposed Internet sales tax law.” Someone should ask the question: Where does the Congress glean the power to pass tax laws on behalf of the states? If you read the stories — Glen Jacobs will be able to tell us a little bit more about this. If you read the post about this, take, for example, the one that I hold in my hands here from CNN Money.
The U.S. Senate is expected to vote on a long-debated Internet sales tax law Monday, paving the way for millions of consumers to start paying sales tax on online purchases.
Mike: I can’t wait. How about the rest of you folks? Why don’t you call me and tell me how you stayed awake tossing and turning in your bed last night. You just couldn’t wait for the internet sales tax to be approved. You wanted to pay it. You’ve been dreaming about the day that you get to pay it. This is where I ask the question what do you mean the legislation would allow? There’s a chapter in my movie Spirit of ’76 called “Taxed by Two Powers.” It’s a debate between future Supreme Court Chief Justice John Marshall, then a very young man, a federalist, and George Mason. George Mason, a great founder, was asking the question of where the new general government would glean the authority to tax and would the people tolerate being taxed by two authorities? You’d have to have two separate sets of tax collectors, two separate sets of accountants and what have you. In other words, it would be expensive to do. You would have a duplication of taxing. Would someone that paid a particular tax on some item in one state then have to pay the same tax on the item and make it due to the feds? This was part of the debate.
The federalist said that it was perfectly natural or it was to be expected and desired that the new general government would have the authority to collect taxes on duties and imposts and imports, because they had to have a mechanism where they would be free and clear of voluntary participation from the states. In other words, they had to have a way to be able to compel the remittance of taxes. It was one of the alleged big problems under the Articles of Confederation, because the taxes were basically voluntary. The Confederation Congress would say: We need $500,000 to operate this year and pay these bills and our debts back. So each state, here’s your bill, your share. Send us the money. Many of the states would say: Yeah, we’re not doing so hot right now. How about no? They wouldn’t send the money. They had to have a manner in which they were able to compel.
It’s a distinction here, though, folks. They’re able to compel where they have a power to tax. My understanding of the Constitution, in what article would they gain the power or would Congress claim the power to legislate on behalf of the states to tax? The states reserved a taxing power. Ask anyone who lives in California whether or not the State of California reserved a taxing power to itself. Ask anyone that lives in New Jersey or New York whether or not the States of New York or New Jersey reserved a taxing power to itself. I think this is pretty clear. What is this idea that we need a permission slip from the Senate and then from the Congress in order to pass this tax? As I said, follow the money. Where’s the money going? The states don’t want to do this because they know that if they do it, you’re going to revolt. That’s why we have this story in the form that it is today.
The legislation would allow the 45 states (and the District of Columbia) that currently charge sales taxes to require large online retailers to collect tax on purchases made by their residents. [Mike: Again, your state already has the authority to do this. Unless it’s in your constitution that they can’t tax in this manner, then they have the power to do it currently.] The law would only apply to online sellers that have sales of at least $1 million in states where they don’t have physical operations, like a store or a warehouse. [Mike: In other words, this is the get Amazon, get big box online retailers tax.]
The bill has a good chance of becoming law. After that, however, it will need to be approved by the Republican-controlled House. Proponents argue that the proposal would not create a new tax, but rather enforce the collection of taxes already charged at brick-and-mortar retailers. Some House Republicans may view that as a tax increase.
If the bill is enacted, academic studies estimate that more than $12 billion in additional sales taxes will be collected from online purchases each year.
Under current law, online sellers are only required to collect tax in states where they have a physical presence. Otherwise, consumers who shop online and don’t pay a sales tax at the time of purchase are supposed to pay the tax to their home state. But estimates are that only about 1% of buyers comply with those widely unenforced laws.
Mike: This is the real long and short of it here, folks. People don’t comply with it because that’s one of the reasons why they shop online. Duh! People are willing to pay shipping rather than sales tax. You’d rather be clobbered by a shipping charge from the United States Postal Service, FedEx, or UPS than you would remand a sales tax. In other words, this cannot become law in those 45 states without dire consequences for those who propose the law. That’s my point. Did you notice in the story that it says that this will require an up or down vote by the Republican-controlled House? Wait a minute. Something is coming to me now. It’s getting clearer. Hold on, hold on. Wait a minute, this is supposed to be the Tea Party Congress, isn’t it? Or at least there’s supposed to be a Tea Party Republican caucus in there, isn’t there? How could a tax-averse Tea Party-inspired congress ever pass such a thing, a monstrosity? Well, we are about to find the answer to that out.
“We think this will help level the playing field,” said Stephen Schatz, a spokesman for the National Retail Federation, one of the bill’s largest supporters. [Mike: Like I always say, folks, follow the money. In other words, people are paying — there are lobbyists and lobbying going on — to pay and to buy this legislation. It benefits someone immensely at someone else’s expense.]
Close to 30% of online shoppers surveyed by advisory firm AlixPartners recently said they would shop more at brick-and-mortar retailers if the tax became reality.
Mike: In other words, Best Buy and other retailers that can — Books-A-Million, Barnes and Noble, just to throw a couple of examples out there. Who competes with Amazon? Those that compete with Amazon — since Amazon sells almost everything today, everybody competes with Amazon. If you’re a book seller and you’re running a brick-and-mortar book store, you’re allegedly at a serious disadvantage because Amazon can sell the book for less and ship it all over the world. You have to compete with Amazon. When they say level the playing field, what they’re trying to avoid saying is that rather than actually compete for business, they’d rather have Congress or the legislatures of the several states do part of the dirty work for them. Why spend the money on advertising, making their stores better, maybe even competing in a more robust manner for the same business? Why expend all that energy when you can just get a tax passed and let the legislators and the tax collector be the guy that actually levels your playing field. Is that an actual leveling of the playing field, or is that a rigging of the playing field?
End Mike Church Show Transcript