Internet Sales Taxes and Lost Utopias

I felt a bit nostalgic on reading that the U.S. Senate was moving on a bill to enable states to collect sales taxes on online commercial transactions. Back in the 1990s, you see, this was a really big deal to people who believed a New Economy was about to transform everything. Those of us on the center-left thought maintaining the ability of states to tax online transactions was crucial to the future of the public sector, while many cyber-libertarians were on fire with the idea of a tax-free online paradise in which the entire economy would eventually be centered.

Well, a lot’s gone down since then, and the issue of online sales taxes looks more like just another money fight than any sort of philosophical debate, with those representing low- or no-sales-tax states (like Sen. Max Baucus of Montana, who happens to chair the Finance Committee) fighting the legislation intensely. But traditional anti-tax lobbies are in the last ditch with the state-level opportunists opposing this legislation, while most states, traditional brick-and-mortar retailers and even a few online merchants who think they’ll do well in a new environment are backing the Senate’s bill, note the Wall Street Journal‘s John McKinnon and Siobhan Hughes:

Some experts said passage of the legislation could have important consequences for retailers and the online marketplace. One could be to encourage some online retailers such as Amazon.com Inc. AMZN +1.23% to expand their physical presence to more states, and offer more services—perhaps including same-day delivery, said Brian Galle, a Boston College law professor.

Some experts also think Amazon, which has said it supports the Senate bill, might hope to offer, for a fee, more tax-handling services for third-party retailers that sell goods on its site.

In any event, with a lot of lobbyists slicing and dicing fine distinctions in the bill’s language and/or its impact on this or that interest, this legislation, if enacted, probably won’t be hailed as a landmark of paradise or perdition, as it once might have been. And for most people, it may not even materially affect where and how they choose to buy or sell goods or services. But it will excite state tax collectors, bless their pointy little heads!

Ed Kilgore

Ed Kilgore, a Monthly contributing editor, is a columnist for the Daily Intelligencer, New York magazine’s politics blog, and the managing editor for the Democratic Strategist.