July 7, 2011

THAT’S FUNNY, I THOUGHT TENNESSEE HAD ELECTED A REPUBLICAN GOVERNOR: Tennessee Gov. Bill Haslam Willing To Take Lead On Internet Sales Tax.

But then, I thought we’d elected a Republican legislature, too, so what do I know?

UPDATE: Hmm. Haslam sounds different in this report. We’ll have to see.

ANOTHER UPDATE: Moe Lane writes:

Basically, the position that Haslam is taking is that the state of Tennessee trying to impose an Amazon tax would probably wreck ongoing negotiations between the state and Amazon.com when it comes to getting a couple more job-creating distribution centers built in-state (which it probably will). Haslam also thinks that a national, standardized system for sales tax is both necessary and proper . . . .

What Haslam is clearly referring to here is the Streamlined State Tax Initiative (SSTI), which is pretty much as advertised: it’s a drive to get the federal government to create an unified, (and hopefully uncomplicated) sales tax standard. Haslam supports such an initiative… and guess what? So does Amazon.com. CEO Jeff Bezos has made it clear that his company endorses the SSTI, and that the company has done so for years. What Amazon objects to is the notion of doing it piecemeal: whether you think that this is due to legitimate constitutional concerns, or merely an unwillingness to build over fifty different set of taxation guidelines* into the software, is of course your privilege.

The point is that Haslam – and Amazon.com – are both taking a position that is a bit too nuanced for the rather simplistic, rather Manichean worldview being promulgated by the unlikely alliance of Democratic-controlled legislatures**/big-box brick-and-mortar retailers like Wal-Mart***. There are a couple of obvious reasons why conservatives may be legitimately concerned with increasing the power of the federal government with regard to this issue, or indeed any issue involving taxation… but it’s still an internally consistent position to take.

Yes, and I favor the national approach, too. It’s clearly within Congress’s proper role and — as the Supreme Court held in Quill v. North Dakota (full disclosure: I consulted for the winning side) — having to comply with vast numbers of state (and local) sales tax rates and, worse, classification schemes, is a burden on interstate commerce.

Meanwhile, reader Spencer Martin — a professor of Finance — emails:

Perhaps someone could clear up *why* States think enacting these internet tax collection mandates will raise any revenue. The biggest target, Amazon, merely sidesteps these laws by shutting down its Associates program and thereby escaping jurisdiction. That leaves only the potential net revenue *loss* from taxable income that the Associates were receiving. Are State budget authorities dumb enough (as CBO is) to score these bills as revenue-enhancing?

I guess so.

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