Fair tax and Internet Sales Tax

I am not yet convinced that Internet commerce should exempt from sales tax. Here is my comment to some who “blindly” oppose Internet sales tax. There are two “hands:”

(1) on the one hand, if you are simply looking at the taxation of Internet sales in isolation, then you might take the position that any new tax is a tax increase, so let’s stop it now;

(2) on the other hand, I believe that a fair tax which replaces income tax, capital gains tax and estate tax and thus puts taxation upon consumption instead of wealth creation is philosophically sound. And if so, the total tax generated by such a change should be “righteous”.

That is, I propose that the level of such a universal sales tax would be a righteous amount, say 10%. That gives the Federal government a budget of 10% of GDP, assuming that all wealth creation is thus measured at the “final consumer” level. And the total tax would be this righteous amount, no matter the channel taxed.

If such a fair system was put in place, then I don’t see any logical reason why certain sales channels should be except. Sales over the Internet would be no more special than “sales conducted on a boat”, or “sales conducted at a place where speeches are given” or any other arbitrary designation.

If you argue against taxation of Internet sales on the basis of hand (1) only, then I agree. Let’s not raise taxes. But if you grant that hand (2) is a valid approach, then you ought to consider the merits of a special exemption for a channel.

The typical opposing argument to my proposal is similar to what happens when someone proposes “let’s have a lower, flat tax and get rid of all deductions” and somebody else arguing against that because getting rid of deductions is a tax increase, while they ignore the first part of the “lower rate.”

As in the past, I fully expect people to oppose my proposal, because they consider only hand (1) but are unable to understand hand (2). They say “you are proposing increased taxes” and “the camel will get his nose under the tent” and “gives more power to the Feds” and so forth.

So in hopes of avoiding such responses let me say it bluntly: “I AM OPPOSED TO AN INTERNET SALES TAX — UNLESS THE FAIR TAX (defined above) REPLACES ALL INCOME TAX, CAPITAL GAINS TAX, AND ESTATE TAX.

Would not you like to get rid of these unfair taxes at the cost of considering all sales channels equal?

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