You are currently viewing the printable version of this article, to return to the normal page, please click here.

EDITORIAL: Save the Amazon.com

Question of the Day

Should Congress make English the official language of the U.S.?

View results

A growing number of states are maneuvering to tax the Internet. These schemes will make shopping online dramatically more expensive.

Until recently, the Constitution has shielded interstate consumers from money-grabbing bureaucrats. Individual states have no power to compel out-of-state businesses to become the tax collector on behalf of more than 8,000 state and local taxing jurisdictions. In 1992, the Supreme Court ruled that there had to be a "substantial nexus" between a state and a mail-order business before the latter fell into the regulatory net.

In just the past two years, Colorado, New York, North Carolina and Rhode Island have seized on the "nexus" loophole to ram through revenue-raising laws known as "Amazon taxes," named in honor of the online retailer that would suffer the most. These measures redefine a company's physical presence to include small-time entrepreneurs who create third-party Web sites to promote products for online companies in return for a modest commission. Although these individuals and small businesses may earn just $10,000 a year from such deals, the new laws define them as employees, which creates the nexus and authorizes the tax.

This applies an antiquated and parochial view of the world that just doesn't fit in the Internet age. An affiliate marketer who lives in Colorado is not marketing just to Colorado residents. He uses the Web to sell to the entire country, if not the world. The connection to the state is minimal and not particularly relevant.

Not surprisingly, the effort to crack down on the little guy has backfired from a revenue standpoint. As a report released last week by the Tax Foundation documents, no Amazon tax has ever generated money because Amazon simply canceled its affiliate programs in the affected states. In fact, those jurisdictions lost overall tax revenue as the small entrepreneurs could no longer rely on a key source of income.

Logic would imply that this lesson in unintended consequences would be heeded by others, but it hasn't. Virginia's Senate, for example, voted 28-12 to impose an Amazon tax last month. Only the inaction of the House spared the commonwealth from becoming fifth on the list of greedy Internet taxers.

While lawmakers trying to outsmart the Internet have proved themselves fools, some may conceal a motive darker than mere revenue enhancement. Amazon taxes also are a way for brick-and-mortar stores - which have a significant presence in lawmakers' districts - to hobble their toughest marketplace competitors.

Such cheap protectionist moves should be repealed in their entirety. In the midst of the worst recession in generations, the last thing our ailing economy needs is more taxes drained from the private sector and poured into the unproductive public trough.

Comments
blog comments powered by Disqus
TWT Video Picks
You Might Also Like
  • Maureen McDonnell looks on as her husband, former Virginia Gov. Bob McDonnell, made a statement on Tuesday after the couple was indicted on corruption charges. (associated press)

    PRUDEN: Where have the big-time grifters gone?

  • This photo taken Jan. 9, 2014,  shows New Jersey Gov. Chris Christie gesturing as he answers a question during a news conference  at the Statehouse in Trenton.  Christie will propose extending the public school calendar and lengthening the school day in a speech he hopes will help him rebound from an apparent political payback scheme orchestrated by key aides. The early front-runner for the 2016 Republican presidential nomination will make a case Tuesday Jan. 14, 2014, that children who spend more time in school graduate better prepared academically, according to excerpts of his State of the State address obtained by The Associated Press. (AP Photo/Mel Evans)

    BRUCE: Bombastic arrogance or humble determination? Chris Christie’s choice

  • ** FILE ** Secretary of State Hillary Rodham testifies on Capitol Hill in Washington, Wednesday, Jan. 23, 2013, before the Senate Foreign Relations Committee hearing on the deadly September attack on the U.S. diplomatic mission in Benghazi, Libya, that killed Ambassador J. Chris Stevens and three other Americans. (AP Photo/Pablo Martinez Monsivais, File)

    PRUDEN: The question to haunt the West

  • Get Breaking Alerts