During this holiday season, more consumers shopped online than ever before. And as I have already mentioned in a previous commentary, this seems to be prompting many government officials to call for taxing the Internet.
But those in government aren't the only ones calling for Internet taxes. A recent newspaper editorial argued that there should be no mystique surrounding e-commerce. After all, it isn't that different from calling a catalog company. You still use the phone lines and a guy at the other end plucks an item off the shelf and puts it in a box and mails it.
Well, a recent analysis by the Cato Institute puts some helpful facts on the table. Aaron Lukas, writing in "Tax Bytes: A Primer on the Taxation of Electronic Commerce," argues that as the birthplace of the Internet, the United States has a special role to play in ensuring that revenue-hungry state and national governments do not unjustly kill the goose that may lay the golden egg. Supreme Court Chief Justice John Marshall long ago observed that the power to tax is indeed the power to destroy. This is still true as we move into the 21st century.
Here are some relevant facts. First, states do not need the additional revenue. The best estimates show that states "lost" about $170 million in 1998, less than one-tenth of 1 percent of total sales tax revenues. By the way, most states are in fact running large budget surpluses right now.
Second, e-commerce does not represent a serious threat to most traditional retailers. "Only 10 percent of American households have ever made an online purchase. And of that group, only 4 percent make more than 10 purchases a year."
A moratorium on Internet taxes is a good idea. Let's not unjustly kill the goose currently laying lots of golden eggs.
I'm Kerby Anderson of Probe Ministries, and that's my opinion.