If politicians want to know why average people get so fed up with political antics, they have to look no further than their newfound interest in the “use tax.”
Never heard of the use tax? You aren’t alone. Indeed, most state legislators didn’t know about it until they stumbled across it in their never-ending quest to find ways to tax the Internet. They see the success of e-commerce, and they won’t rest until they can levy taxes on the billions of dollars changing hands over the Internet.
This isn’t some fresh craving, of course. States have, for years, tried to tax Internet sales. But the U.S. Supreme Court said that Internet sales must be treated like mail-order catalog sales. Customers are subject to a sales tax only on the purchases they make from mail-order businesses that have a nexus, or connection, in their state.
Part of the reason for limiting the tax grab is the old “no taxation without representation” principle. Internet sales taxes would permit legislators in one state to tax citizens of another state when they buy something over the Internet. And the taxed citizens would have no recourse at the polls because they don’t live in that state.
But the use tax is different. Being the flip side of a sales tax, state lawmakers can say to their own citizens if you buy something over the Internet, you still owe taxes on it in the state where the purchaser resides.
In an effort to facilitate the extortion, a few states are putting a line item on tax forms where taxpayers are supposed to estimate how much they owe in use taxes.
But the states have unwittingly — better yet, “witlessly” — created a new problem for themselves: compliance. Since most citizens don’t know about or ignore the use tax, the states are only selectively enforcing it, usually on big-ticket items that bring in sizable revenues.
So instead of a just, equitable and transparent tax system, the states are creating just the opposite, just so they can wring out a few extra dollars.