Monday, July 5, 2010

Bill Delahunt Proposes An End To Tax-Free Internet

I read this article from cnet news by Declan McCullagh regarding a proposal by Rep. Bill Delahunt regarding taxing internet sales.
The halcyon days of tax-free Internet shopping will, if Rep. Bill Delahunt gets his way, soon be coming to an abrupt end.

Delahunt, a Massachusetts Democrat, introduced a bill on Thursday that would rewrite the ground rules for Internet and mail order sales by eliminating the option for many Americans to shop over the Internet without paying state sales taxes.

At the moment, Americans who shop over the Internet from out-of-state vendors usually aren't required to pay sales taxes. Californians buying books from or cameras from Manhattan's B&H Photo, for example, won't be required to cough up the sales taxes that they would if shopping at a local mall.
I personally think this is a bad idea.  While traditional retail locations may feel they are at an unfair advantage with online stores like, they forget to consider the cost of shipping into the price of the item (although many retailers do offer free shipping if you make certain qualifying purchases).

I also believe that it is a bad idea to try and create new tax revenue to fill existing budget gaps because eventually states will overspend and be back in the same situation.  Just look at the housing bubble - local tax bases jumped but intsead of keeping budgets the same and saving the extra cash, local governments funneled the money into numerous pet projects and when the housing market went bust, municipalities were scrambling to fund their stuff.

I also think that once you allow states to tax goods purchased in one state from another you open the door for more unnecessary regulation.  I would imagine taxing the internet would allow the federal government to evoke the Commerce Clause in the constitution and step in...


  1. Although Oregon has no sales tax, I also dislike the idea.

    Most of our budgetary woes could be greatly alleviated by reigning in corporate welfare, especially in the area of defense.

  2. Local governments bloated their budgets during better times and now they are paying the price. Give them more tax revenue and all it will go towards is more pet projects.

    In Orlando, despite the housing bubble having burst, local officials have been pushing really hard to revitalize the downtown area by buying the Orlando Magic a new arena and building all sorts of stuff with tax payer money - and on some have been very upset that property values have been declining so much in the past couple years believing such decreases are unnatural, when in reality, they are returning to pre-boom levels (they are actually slightly higher but local officials got greedy). They even wanted to increase property taxes by 23% in 2006 to make even more money...

    I am always interested to here what candidates who have an economics background have to say because I hope they have a better understanding of matters...


Please share your thoughts and experiences in relation to this post. Remember to be respectful in your posting. Comments that that are deemed inappropriate will be deleted.