This was the case in New Jersey, where Amazon offered to exchange building new distribution centers -- promising to create some 1,500 jobs -- in return for supporting a state sales tax on its Internet sales but with a delayed phase in.
It is beyond dispute that state governments are suffering as a result of the continuing, now four-year-old economic downturn. And many governors, Christie included, deserve credit for taking steps to meet these fiscal challenges by making some tough cuts to some state spending programs. But this latest move represents serious backsliding by governors who – when push comes to shove – still would rather look for ways to raise more revenue from taxpayers then to continue wielding the budget scalpel.
The Christie-Alexander plan is not without risks. Many Republican governors pledged in their campaigns they would not raise taxes on citizens in their states. Grover Norquist, president of Americans for Tax Reform, notes that the bills being pushed in Congress to allow states to collect online sales are troubling, and not simply because of the $23 billion it could raise in new revenues.
As Norquist explains, an Internet sales tax would “dissolve the physical nexus standard for tax collection, allowing tax administrators to reach well across their borders for new revenue.” While this is a new avenue in the battle over higher taxes, it is familiar to tax fighter Norquist. “We've grappled with states burdening non-residents with their tax codes once before,” he notes -- “it was called taxation without representation.”
The move to tax Internet sales, clothed as a “fairness” issue, is the typical “wolf-in-sheep’s-clothing” ploy so often used by governments unwilling to cut expenditures to match revenues. It matters not whether its proponents have a “D” or an “R” after their name. It is a tax increase in either case.