Monday, November 21, 2011

Indiana State Senator Luke Kenley Pushing for Online Sales Tax

HARBESON: I’m not buying what they’re selling

SELLERSBURG — State government officials hate the fact that online businesses do not have to charge sales tax on purchases if the company has no actual physical presence in the state where the customer resides.

In Indiana, Republican State Sen. Luke Kenley hates it so much that he even wants the federal government involved.

Like any good politician, Kenley is salivating to spend — he knows lots of transactions happen online and thinks the government should get a cut of the action. He estimates up to $400 million annually could be siphoned off the people if the government can get its hands on 7 percent of the total spent every time a person wants to buy stuff.

He wants states to be able to treat online businesses as badly as they treat brick-and-mortar businesses — by forcing the online companies to become tax collectors too.

Many brick-and-mortar companies are on his side. They say they want to “level the playing field,” which really means they want all businesses to be equally dragged down by government regulations. After all, if they have to perform tax collecting duties, then every other business should be forced to perform tax collecting duties.

I can understand their frustration. Some traditional merchants have found themselves in a situation where they are simply showrooms. Consumers come to look at products and then go home and order online to save money.

To make the situation worse, in 2007, when the big online retailer Amazon created a physical presence in Indiana, the state made a deal that allowed the company to continue not collecting sales tax. As a result, the state is being sued by a large mall retailer to force Amazon to start playing tax collector for the state too — just as the retail merchants in their malls have to do.

It’s too bad that Indiana’s brick-and-mortar companies see the online companies as the problem when they are only trying to remain free from the burden of tax collecting. They should be focused on the entity responsible for forcing any business to collect taxes.

If the brick-and-mortar companies are actually upset enough to come together to take action, maybe they should also refuse to play tax collector. Tell the government to do their own darn dirty work.

Why is any of this an issue in the first place? Because Indiana residents are supposed to report their out-of-state purchases and pay any sales tax they “owe” to the government on those purchases. Few people actually do this, which means the government has a problem.

Sales taxes can still be paid no matter what an online business does or where it physically exists but that’s not happening very often. Evidently the vast, vast majority of people don’t think they owe the government anything when they buy a sweater.

It’s good to hear that the amount of sales tax collected from online sales is tiny in comparison to the transactions that are occurring. It gives me hope to think that there are very few people brainwashed enough to actually believe they owe the government every time they happen to engage in voluntary trade with others, no matter where the buyer and seller happen to live.

If individuals throughout the United States did think they were actually under some sort of moral obligation to pay sales taxes, they’d pay. There would be no issue whatsoever and certainly no need for Kenley to push for federal government involvement so states could force business to collect the payment.

All Kenley’s proposal adds up to is an attempt to validate a government claim to property that the people are simply unwilling to accept.

— Clark County resident Debbie Harbeson thinks the only thing worse than being forced to be a taxpayer is being forced to be a tax collector.


  1. Full, shameful disclosure: I once voluntarily paid Indiana state sales tax on a "remote" purchase. It was, in fact, my first computer, which would mean this happened back around 1990, and I bought by phone out of the "Computer Shopper" (remember that massive publication? Wow, a real blast from the past, that one is). That was back when I was young (well, younger, anyway) and stupid (well, more stupid, maybe). Within a month or two, it did cross my mind that the state of Indiana had certainly not rendered any service to me, or to FastMicro of someplace in Arizona, or in furtherance of that particular transaction, by which they could ever claim to have earned that tax ... not while keeping a straight face, anyway. Since then, I've not paid a cent in sales tax on mail/phone/online purchases. Which must mean I haven't made any such purchases. Because, otherwise, I'd be breaking the law, wouldn't I? And that would never do. Never, never, never.

  2. Jim, my past is similarly colored so you're not the only one who as young and (more) stupid. :)