TECH/GOV: Forget Net Taxes. Forget Sales Taxes Altogether.

From: Chris Rasch (
Date: Thu Mar 08 2001 - 11:36:16 MST

-------- Original Message --------
Subject: Forget Net Taxes. Forget Sales Taxes Altogether.
Date: Thu, 8 Mar 2001 06:33:52 -0500
From: "R. A. Hettinga" <>
To: Digital Bearer Settlement List <>,

March 8, 2001

Economic Scene: Forget Net Taxes. Forget Sales Taxes Altogether.


The proposed Bush tax cut is getting all the attention, but another tax
issue has recently reappeared in the halls of Congress: the thorny
of how to collect sales taxes on the Internet. A three-year moratorium
established by the Internet Tax Freedom Act of 1998 expires in October,
the states are urging Congress to resolve this longstanding issue.

The Supreme Court decided several years ago that one state cannot
businesses in another state to collect taxes for it, since the power to
regulate interstate commerce is reserved for Congress.

Although Congress certainly has the power to develop a solution, it is
reluctant to take the heat for imposing a "new" tax, particularly when
doesn't have the opportunity to spend any of the revenue. But this is a
bread-and-butter issue for the states, and they continue to press
to take action.

Eventually, Congress will probably bless a system that allows the states
collect taxes on remote purchases - those made through catalogs or over
Internet - in exchange for the states' agreeing to simplify and
their sales tax rules.

But allow me to propose a more radical solution: states should drop the
sales tax entirely and substitute other ways of raising revenue. The
tax is one of the worst taxes we have, and no amount of chewing gum and
bailing wire will fix it.


R. A. Hettinga <mailto:>
The Internet Bearer Underwriting Corporation <>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

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