I like guns. I like handguns, rifles, and muzzleloaders (yes, the kind of long gun that is loaded by pouring black powder down the barrel, followed by pushing a bullet with a ramrod). So when I wanted to purchase a quality muzzleloader with an attractive wood stock, I explored the shelves of some local gun stores in northern Virginia for a .50 caliber Lyman. Coming up empty, I turned to the internet and scored a winner from a Cabela’s store in Connecticut. I happily bought the gun and paid the sales tax, as I knew I was required to legally.
How did I know of my obligation? Because I was former Kansas Congressman Jim Ryun’s chief of staff in the late 1990s when Congress first began discussing what the federal government should do about states collecting sales taxes on items sold over the internet. I heard some conservatives at that time suggest that Congress should not allow states to collect such taxes because the internet was “in its infancy and should be nurtured and protected.” That kind of language was shocking to me then, and it remains inconsistent with my conservative values today. In fact, those tones sound eerily similar to President’s Obama’s penchant for propping up wind and solar companies like Solyndra with subsidies and tax credits.
To be clear, my concern relates to the federal government’s efforts to prevent states from exercising their authority over sales taxes; taxing access to the internet is an entirely different matter. Thankfully, the Internet Tax Freedom Act already prohibits the IRS (and other taxing authorities) from levying taxes to go online. We certainly do not need or want any new taxes imposed on the American public, especially a tax that would penalize someone for simply using the internet. I’m pleased that the U.S. House of Representatives recently voted to make permanent this ban on taxing access to the internet. The Senate must follow suit and pass this bill before November when the ban is set to expire.
But what about sales taxes which are actually owed? Nobody would have told me to skip town without paying the sales tax if I had purchased my muzzleloader while standing in the Cabela’s store in Connecticut. Conservatives are understandably opposed to any efforts to raise tax revenues or to grow the size of government, but that concern can be easily resolved without imposing on states’ rights. What can’t be easily justified is a scheme to allow the federal government to favor one part of the market over another.
Government should not be picking winners and losers, or tilting the playing field in favor one segment of industry. There’s a similar debate today regarding the reauthorization of the Export-Import Bank. In 2012, nearly 80 percent of the Ex-Im Bank’s book of business benefited just one company: Boeing. The Ex-Im Bank not only exposed taxpayers to huge risk under this unbalanced lending scheme, but it also disadvantaged all the other companies that did not get the benefit of being identified as the government’s favorite manufacturer.
President Obama and I will have to disagree on the wisdom of giving preferential treatment to an airplane manufacturer ranked as the 77th largest corporation in the world. But can conservatives agree that an even larger online company should not be treated as the teacher’s pet? (Amazon is ranked 35th in the world!)
A growing number of conservatives continue to re-think this issue, especially as technology makes collecting sales taxes more efficient and less damaging economically than collecting income taxes. The economic literature shows that a sales tax system is better for economic growth than the income tax system that was imposed on our economy a hundred years ago.
So what about the risk of liberals simply adding new sales tax revenues on top of already onerous income tax rates? After all, liberals want nothing more than to increase income taxes while creating additional avenues to leverage resources out of the hands of citizens and companies.
To stop ever-expanding tax hikes and the corresponding growth of government, I call on state legislatures to pass laws like those signed by Governors Scott Walker and John Kasich that will automatically roll back income taxes in their respective states once Congress ends special treatment for online-only sellers. Several states introduced similar measures in 2014, and it should be the mission of all leading conservatives to see comparable legislation enacted in as many states as possible once Congress acts.
The co-founder of the American Conservative Union, William F. Buckley, Jr., may have been the first leading conservative to argue aggressively for what is now known as the Marketplace Fairness Act. Others, including economist Art Laffer, have since joined Buckley to explain why this approach is actually economically superior to the current state of affairs. Many on the right are conflicted because of the competing conservative values at stake. I get that, but I encourage conservatives to keep in mind the principle I found compelling over a dozen years ago: the government should not interfere with the marketplace. It should not be coddling the wind energy industry, airplane manufacturers, or online-only sellers. Let’s allow competition to determine winners and losers, and let’s keep the federal government out of the judge’s box.
Dan Schneider is the Executive Director of the American Conservative Union. He oversees the annual CPAC conference and the ACU Congressional Ratings of Congress.