**All "distant" transactions should be subject to the same federal sales tax

Multiple state government revenue departments are pushing the idea of a state compact as a way to enforce their sales tax collections which otherwise raise hell with the "commerce clause" in the US Constitution and make courts tolerating them hypocrites at best and doing much worse to respect for court decisions.

This idea of 30 or more governments (including SD) requiring a whole lot of enormous databases storing an awful lot of information which would otherwise be private and making it available to all the other states in the compact is just plain frightening and absurd Precise addresses continuously updated at some point probably requiring GPS data and tracking of shipping etc miles in each state and so on would be required to give the system any respect as honest at all.

South Dakota has used the propagandized idea for such a tax compact to force SD cities to jack up sales taxes on food already. Many online retailers with even the hint of a SD presence already collect the tax and most of them overtax for the benefit of SD.

The idea that over 30 states feel a need to grasp at internet sales for more tax revenue suggests this task really is better handled by the federal government. We just bought a winter coat via an internet site.
We got dinged an extra 2 % because their computer database and system won't allow any less for South Dakota than 6% even if a buyer is a rural resident not actually subject to the city sales tax.

All distant sales not just internet sales should be subject to a federal sales tax which replaces all state sales taxes which states might use otherwise. Get the average of all State Sales taxes and apply that to all distant transactions. If the average turned out to be 5 percent, then If you or I bought a book from Amazon, a pair of jeans from another South Dakota town but did it by phone or mail, or subscribed to a magazine or newspaper instate or out of state, we would know the federal tax was 5% and no state taxes would be payed.

The other component of this simplification would require that the federal government return 95% or so of all the federal distant tax collections to the states on the basis of their population. This removes the need for retailers to maintain huge intrusive databases of every buyers exact home location, exactly what type of merchandise they purchased etc.

States like SD with the hypocritical "use tax" which does not apply to everything that is actually used, but only to things South Dakota buyers use that they purchased across state lines would then be forced to remove this deceptive tax and it would be replaced with the federal distant sales tax which everybody knows and is collected by every seller or paid by every buyer.

This would not give states huge new bureaucracies nor even make it possible for the federal government to generate a new huge bureaucratic organization. It might be one more damn tax, but it would not be dozens of damned taxes so complex and privacy intruding that they are all detested by all who buy or sell merchandise beyond their local cash register checkout.

Web mavens and online merchant libertarians need to get over it and get with a unified distant federal tax instead of causing the generation of increasingly complex and intrusive state sales, use, twist and turn, taxes and personal databases shared with multiple other states and databases. This would be much more efficient and much fairer, much simpler, and much less subject to conflict between buyers and sellers.

**Stay tuned even if you never buy anything from anybody except your local grocery..all both of you--Doug Wiken

Comments

[Nicholas Nemec]

Thanks for a good post Doug. As much as I like buying stuff online and screwing Pierre out of the sales tax I realize that my days of "sticking it to the man" are likely numbered.

Your plan has one fatal flaw that may doom it to the ash heap of history. It is to simple. Never underestimate the ability of lobbyists to convince legislators to do the wrong thing.