SIOUX FALLS, SD - The U.S. Senate voted overwhelmingly this week to allow states to collect sales taxes on online purchases. Many states already require consumers to voluntarily pay sales taxes on their online purchases, but few comply with the law.
Its estimated the change will bring in an additional 12 billion dollars in revenue for state and local governments. Many local and state officials say this is money they are "losing". Few things infuriate me more than hearing politicians speak of our money as if it belongs to them and they are entitled to it.
Some claim online sales taxes are an issue of fairness. They say local brick and mortar retailers must collect the tax, so online retailers should have to do it, too. I don't accept that argument, since there's nothing stopping local retailers from expanding their businesses to include online sales.
However, let's follow the money trail. What is currently happening to that $12 billion in estimated uncollected tax?
The answer is easy... its being spent elsewhere. Its not sitting in a big savings account somewhere. The dollars consumers save by not paying online sales taxes are currently spent on other goods and services. I suspect many of those are local goods and services on which sales taxes are collected.
That's $12 billion dollars currently moving through the private sector helping to pay salaries and create jobs and opportunity. And the bright idea in the congressional brain trust is to take that $12 billion out of the economy and give it to government.
Admittedly, some of the $12 billion will be returned to local communities in the form of construction projects and associated salaries. But how much of that money will be consumed by government bureaucracy, inflated prices, waste and fraud? Those dollars should be left in the private sector and in the hands of consumers.
Thanks to conservative voices in the House, this increase in sales taxes may face a tough road ahead.
Georgia Republican Tom Graves said, "Call me a conservative, but I believe the right approach to tax fairness is to reduce rates — not force higher rates onto others."
Greg Belfrage is heard mornings from 6am-9am on KELO Newstalk 1320 AM/107.9 FM.