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Internet Tax a Bad Idea

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.

Tyranny is afoot. And this evil arrives in the guise of secondhand books and cheap Chinese trinkets. So beware.

Actually, if anyone ever needed an obvious illustration of how government overreach can damage an economy, he need look no further than the Colorado Legislature's foolish attempt to wheedle a few extra bucks out of consumers via an Internet sales tax.

After legislation forcing online companies to collect sales tax passed, Amazon.com moved to protect its consumers and long-term interests by severing its ties with Colorado. Unfortunately, this meant closing its associates program, which involved an estimated 5,000 jobs.

Amazon's actions were not surprising, as it did the same in North Carolina and Rhode Island (a state, incidentally, that reportedly saw no additional revenue generated after passing a similar law taxing Internet sales).

"They've done nothing here but spit in our face," bristled Colorado Senate Majority Leader John Morse in a ludicrous rant on YouTube, wherein he went on to describe Amazon's actions as "such tyranny!" Tyranny? Imagine that.

Sean Hannity FREE

Seeing as we're throwing incendiary words around, it should be noted that Morse's actions are a far better fit for the definition. The dictionary, after all, defines tyranny as "oppressive power exerted by government" or a "government in which absolute power is vested in a single ruler."

Besides, Amazon does not possess the power to compel its will on any Colorado citizens. All Amazon can do is pick up and leave. The state, on the other hand, does have the ability to coerce both taxpayers and corporations.

Once you get past the hyperbole of embarrassed legislators, the argument -- and it has appeal -- is that there is a lack of "fairness." Why should online stores have an advantage over the traditional stores in the state?

Well, Amazon came up with better technology; it offers better services; and thus far, it has a far superior business model. That's why. Let's leave the slippery concept of "fairness" to toddlers and legislators.

Amazon and other similar online stores offer a nearly infinite array of choices at affordable prices. Their success hurts many on-the-ground businesses, no doubt, but it also benefits millions of consumers, who save money. The tax savings that consumers get from Internet purchases will be spent elsewhere -- more than likely in bricks-and-mortar establishments.

But let's not forget that legislators also packed the bill with punitive measures and mandates that resemble, gulp, "tyranny."

Online businesses would be required to not only notify consumers to pay taxes but also hand over consumer sales records, and if they didn't, they would pay fines for every violation -- many beyond their control.

And as a recent Tax Foundation study on "Amazon laws" concluded, online companies would have to deal with more than 8,000 different tax computations should every state join Colorado's effort. Amazon would be nuts not to fight.

Still, you can understand why some folks are angry. ProgressNow, a liberal advocacy group, has launched a boycott of Amazon, which is a fine way to make a point, though I suspect its impact will be as small as the national Whole Foods boycott (which started after John Mackey, the company's CEO, had the gall to offer some constructive ideas on health care reform).

One only wishes that citizens could boycott irascible and intrusive state legislators -- with their knee-jerk, ill-informed, anti-capitalist sentiment -- who are willing to risk the jobs of thousands of citizens for a couple of million bucks in the state's coffers.

Alas, no such luck.

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