Article from News.com:   Net taxes could arrive by this fall

Yikes.  It’s here again – net tax debates.  The U.S. operates under a federalist system and has a long history of protecting states rights on all sorts of fronts.  However, this model is clearly showing signs of wear and if anything is going to break it, my bet (I wish I could bet) is on the Internet being the cause.  

The guy who thinks the Internet is made of pipes, Alaskan Senator Ted Stevens said he would like:

“to see an impregnable ban on taxes on the Internet.”

Wow!  Well Ted and I finally agree on something relating to the Intarweb… I mean Internet.   I say:  DON’T TAX THE PIPES… or anything flowing through them.

Here is why Internet taxes are bad:

1. They are a huge burden on entrepreneurs.  Some states (like California) are pretty obnoxious about “nexus” which determines if you owe taxes to them or not.  It’s hard to keep track of and easily activated (like a sales person in California…. or possibly even one that visits a lot).  Anyway, collecting sales taxes is an incredible burden and just creates jobs for accountants and a requirement that entrepreneurs buy crap tax accounting software that makes developing cool and interesting applications very difficult.  This whole issue will be more critical as more entrepreneurs develop cool and interesting web businesses.   Whether it’s selling stuff on eBay – a big generator of new small businesses, but when does this qualify for sales taxes? – or a Web 2.0 innovator that has a cool new service that costs a few bucks a month or year for a premium service?  The burden on these business is quite significant.  Amazon and Dell can probably afford the accounting overhead, but not a small business. 
2. If you think state governments are bad, imagine how obnoxious some of these little townships are.  I can’t wait until some backwater town decides to tax the Internet in some stupid way.  You know it will happen.
3. Someone will decide to try tax e-mail or some bullshit like that.  That will be fun.  Let’s have various national, state, county, and city, governments tracking our every Internet activity so they can tax it.  Not to mention the joy someone in that chain will take in knowning what everyone is doing.  I’m sure nothing nefarious could happen…. uhm yeah.

If the bureaucrats who are so effective at wasting all the money we already give them insist on taking more, here are my recommendations:

• Create a national sales tax and redistribute it to the states so at least it will be uniform to collect and pay.  (And if we’re lucky cause a panic and never pass.  Because, just like income tax, once they get their hand in the cookie jar they will never take it out.)
• Only tax companies that do a large amount of business over the Internet.  Like $100mm or more so that the cost of developing systems to manage and pay all these gazillion different taxes (in Texas the sales tax is different in every county…. imagine having to sort that crap out as a small web site.)  

God save us from these jackass like Senator Michael Enzi from Wyoming who wants to mandate taxes on Internet purchases.   I’m glad that the National Governor’s Association is lobbying for this.  BTW, I bet those hypocrites don’t pay the voluntary sales tax now.

The states are collapsing into financial ruin from missing this sales tax so far.  Let them whine some more.  Besides, if they actually get money from some new windfall like this they’ll just waste it anyway.  No, I’m not cynical about government spending.  Not at all.  If only they were run like businesses. 

Oh and while I’m on the subject I love this one: 

“I’ve got to spend this money now or my budget will get reduced next year.”

Way to encourage the right behavior.

/rant