Thoughts on Tax Reform

 Posted by on 26 March 2010 at 10:00 am  Activism, Amazon Tax
Mar 262010

In the a March 18th Wall Street Journal article on Colorado’s Amazon Tax that I blogged earlier, Geoffrey Fowler discusses Amazon’s proposal for taxation of inter-state sales:

Mary Osako, a spokeswoman for Inc., the largest online retailer by revenue, said state-by-state laws are creating a “very complex sales tax regime,” and that the company would only support a “simplified system, fairly applied to all business models.” Amazon is in favor a national streamlined sale-tax effort that would mandate sales tax collection by out-of-state retailers in 23 states that have voluntarily signed on to the program. “We aren’t opposed to collecting sales tax within a constitutionally permissible system applied even-handedly,” Ms. Osako said.

While such a system would be infinitely preferable to a nightmare patchwork of fifty state tax schemes for online retailers, I cannot endorse that proposal.

Our tax system is a complete mess: it desperately needs reform. I say that, even though I regard all compulsory taxation as a violation of rights. Why? Tax system do not merely differ in the ultimate amount of taxes paid. They also differ in whether they’re more or less even-handed between persons and groups, more or less complex to implement, more or less burdensome to comply with, more or less clear on reading, more or less draconian in penalties, and so on. If we have compulsory taxes — and at this point, that’s a given — then those taxes should be minimally invasive of our property and contract rights, even if they should be abolished ultimately. They should follow the principles of objective law as much as possible.

At present, however, taxes in America are hugely unfair, hopelessly convoluted, terribly burdensome, and utterly opaque. Adding more such taxes — as with Colorado’s Amazon Tax — is not the solution. Nor is any grand scheme for some new simplified income or sales tax: today’s legislatures could not help but make a greater mess of that by adding layers of complexity to it. Instead, federal, state, and local politicians should start simplifying, clarifying, and repealing the worst parts of the existing tax code — reducing the tax burden in the process. Doing that could free up a whole lot of productive energy in America for economic growth!

For more information on this issue, please visit Repeal the Amazon Tax.

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