Why Taxing the Internet is Bad for Your State

Posted: July 1, 2011 in Ramblings

If you’ll excuse me for a moment I’m going to put on my finance cap (for those who don’t know I majored in finance in college) and talk about taxes and why they’re bad for the internet. Recently California has passed a law requiring local affiliates of companies like Amazon to collect sales tax and this only does 1 thing, it hurts the local businesses. Companies like Amazon are big enough and agile enough to shift the distribution network (also I’m a logistics consultant) fast enough that they can avoid these taxes that are placed on them by the states, and the ones that suffer are the affiliates who are losing massive chunks of their business. Which in turn creates less money to be spent on things like bills, business expenses and salaries and when the salaries start to drop it can create a massive domino effect that can go from people not being able to buy local products (hurting local business people), to having to cut back on purchases all together (hurting your local retailers), to if salaries drop enough that people are forced to move to less expensive housing (hurts your property taxes) and so on and so forth. So when politicians who have already spent all of everyone else’s money want to tax something like purchases on the internet all they are doing is losing tax revenue in other places. I’m not saying that we should get rid of taxes altogether, they are a necessary evil, I’m saying that the people in charge should look at the waste that they have built themselves and try too cut the fat before they look to people like Amazon for a payday when all they are doing is hurting the people in their state.

I’ll leave you with this quote from former Supreme Court Chief Justice John Marshall “The power to tax, involves the power to destroy.”



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