Posted February 2, 2000 Taxation Without Misrepresentation By John Martin There could be a sign on the side of the computer this is being written on, like the ones you see on the rear ends of tractor-trailer rigs: “This computer paid $91.90 in Internet taxes.” Dell Computer collects the use tax for the District of Columbia, where I live and work. And all those empty Dell boxes I see on the curb on trash-pickup day in my neighborhood attest to the fact that plenty of others here make their mail-order computer choices without much regard for whether they will be taxed on the purchase. Yet, from what you hear so often in the debate over taxing Internet commerce, you’d think that Dell and other Internet and mail-order marketers would quickly slip under the waves of Chapter 11 if the pro-tax side has its way. Indeed, that’s one of the more responsible arguments those who oppose Internet taxes make. Too much of the debate amounts to playing to the all-taxes-are-evil forces that always lurk in the American body politic. There’s plenty of room for thoughtful people to differ over whether this new and dynamic industry should get a chance to grow without being forced to extract state and local sales and use taxes from its customers. And government, by its economic policies, can certainly have a profound effect: In the 1800s, federal land giveaways in the West provided the financial incentives for the country to be spanned by railroads. Many people thought those giveaways were wrong, and an astonishing amount of graft and corruption accompanied the laying of the tracks from sea to sea, but the railroads were largely responsible for the making of the economic powerhouse that the country became over the next hundred years. Taxes may not be good, but they’re not evil either. They’re morally neutral. Sorting out which sectors of the economy should bear what share of the tax burden has always been an unpleasant job for politicians, but one that comes with the territory. Their job is not only to make the difficult choices, favoring one sector or another or trying to balance the tax burden among different sectors, but also for them to be what they claimed to be in their election campaigns: leaders, those who try to educate the taxpayers, rather than followers who play to ignorance and misdirected anti-government sentiment. There are some politicians with unimpeachable anti-tax credentials who are acting like leaders in this debate. While Michigan’s governor, John Engler, doesn’t favor new taxes on Internet transactions, he was in Washington this week to argue to Congress that federal proposals to ban state and local taxes on this new form of commerce “would be an unprecedented intrusion on the rights of states to set their own tax policy.” Nobody goes into politics because they enjoy raising taxes, and imposing taxes on sectors of the economy that have largely escaped them in the past is uncomfortably close to that. But this question deserves a principled hearing, without being short-circuited by demagoguery from politicians who should — and do — know better. John Martin is editor of Governing.com. Agree? Disagree? Want to expand on a point? E-mail us at mailbox@governing.com, and we'll post your comments here. Please include your name, location, government or business title or job description, and a daytime phone number (for verification purposes). Previously in View: Too Much Democracy: control of the schools (posted January 24, 2000) The Art of Apology: politicians and regret (posted January 18, 2000) The State vs. the Wild, Wild Web: regulating the Internet (posted January 14, 2000) Back from the Dead: party control in the South (posted January 11, 2000) Welcome to Governing.com (posted January 2, 2000) Copyright © 2000, Congressional Quarterly, Inc. Reproduction in any form without the written permission of the publisher is prohibited. Governing, City & State and Governing.com are trademarks of Congressional Quarterly, Inc.