Federalism, a system of dual sovereigns and multiple levels of government, was envisioned by the founders a method of protecting and securing individual rights. The concentration of power in a single sovereign was viewed with much skepticism by the founders, inasmuch as concentrated power was apt to be abused (which is what they’d fought a revolution over, after all). Federalism has also offered the benefit of spurring competition amongst the states, whose differing policies offer a variety of attributes to attract (or repel) potential residents.
Among these competitions is if and how taxes are collected. Florida and Texas, for instance, collect no taxes on income, making them very attractive for people who can easily choose their states of residency, like retirees. Some states, like Delaware, have no state sales taxes, making them havens for people in neighboring states like Pennsylvania and Maryland, who can simply hop across the border to buy big-ticket items like flat-screen TVs. Likewise, some states have begin to offer ways of offsetting the local taxes residents pay for the “privilege” of receiving cable video service.
Federal laws already prohibit localities from taxing people for purchasing satellite video services. But cable providers are often taxed twice at the local level, with both local sales taxes and so-called “franchise fees”. A few states have responded to the lopsided tax bill by offering cable customers lower state sales tax rates. But for some reason, Rep. John Conyers (D-MI), the liberal Chairman of the House Judiciary Committee, wants to put a stop to this sort of tax break for consumers. HR 3679, the fascinatingly named “State Video Tax Fairness Act,” would restrict states from lowering taxes on cable customers, which he presumably believes is “unfair.”
The bill has ostensibly been offered to correct some perceived “inequity” between satellite and cable video providers, although we must remember that the taxes are paid by consumers, not providers. Satellite providers have been fortunate to have a federal law forbidding any local franchise or sales tax to be levied on their customers. Cable providers and customers have no such protection.
While it is certainly worth advocating an end to the somewhat cowardly practice of localities, states, and even the federal government turning video service providers into private “tax collectors,” it would seem to be a sorry state of affairs of we begin to forbid states from lowering the tax burden on citizens. If there is one thing that is certain in this nation, it is that the federal government will eagerly and greedily assume powers and property from the people and will not easily give either back. Furthermore, if states are inclined to give people back some of their hard-earned cash, then it is not the proper role of the federal government to stop them.
The federal government is free to give the people back some of the money it collects in taxes if it perceives some inequity in tax rates and what goods and services are taxed. Should HR 3679 pass, it could open the door to all manner of federal interference in states’ efforts to lower taxes. Who is to say that at some point down the road, a future Congress, acting on the precedent of the so-called “State Video Tax Fairness Act”, wouldn’t move to enact a “State Income Tax Fairness Act”, and prohibit states from offering tax breaks to seniors, small businesses, or college students. Or perhaps they would go a step further, and find that it is “unfair” that some states spurn taxes on income while others tax income?
Federalism, one of the bedrock principles on which this nation was founded, works to protect the people from such gross abuses of power, and ultimately, it is the people who will lose out if HR 3679 passes. Left to their own devices, the people will, time and again, advocate that they should be taxed as little as possible. The Federal government has no business telling them to advocate otherwise.
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