I feel pretty strongly about Internet sales tax. I have owned and run an e-commerce business for over 5 years. We pay sales tax to our state for any orders that ship to our state. Orders from out of state are exempt from sales tax, as they should be.

When someone orders from out of state we simply box up the order and post it to them. Their government doesn’t have to do anything to ensure the package arrives safely, that is done by the postal carrier (who we pay for that service). The package arrives and other than disposing of the box and packaging (which the customer pays trash collection fees for) there is nothing that the customer’s government is required to do.

In a traditional retail environment there are expenses the government incurrs when you do business. Traditional retail stores require police and fire protection, water and sewer services, etc. The shoppers generate waste and pollution driving to the store and cause traffic and parking issues. These are real costs to a government and that is why taxes exist. Taxes exist to compensate the government for the services it performs.

In the case of Internet sales tax, what services is the foreign state government performing? None.

Those issues aside, read this article on Why Congress Should Not Authorize a State Sales Tax Cartel. From September of 2001, it is still perfectly relevant. It is well written and gives even more reasons why a nation-wide sales tax should not be allowed. I won’t repeat the issues here… read the article.

Let’s think for a minute about what life would be like with nation-wide sales tax. It will either be structured one of two ways. Either the national government could handle everything and divy up the funds to individual states, who would then divy up funds for the individual counties. Or the states themselves would hanlde it (more likely). In both instances, can you imagine the administrative load placed on the state or federal government just to administer such a system. That’s less money going where it should. And think of the problem with states managing their own sales tax.

Just for selling something to a customer in another state you could be required to fill out paperwork, even surrender financial documents stating earnings. For most e-commerce businesses that would mean filling out paperwork and submitting private, confidential information to all 50 states. How do they have a right to that private, confidential information?

There are more issues to the Internet sales tax issue than it seems. Please before making any judgements do the research and learn more about what would be required of business owners and what the benefits (very few) would actually be of a nation-wide Internet sales tax.