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Of Colorado Gov. Roy Romer, it might fairly be said that he never met a transaction that he didn't want to tax. Earlier this year, he bravely took up the noble cause, proposing that towns, counties and states be allowed to tax business conducted on the Internet.
Although such taxes are now forbidden by Congress, there was some merit to Romer's position. If I walk downtown and buy a compact disk from the local store, I pay sales tax on the transaction.
If I order the same disk by mail through a club, or by phone or via the World Wide Web, I'll pay some shipping charges, but generally I won't have to pay sales tax.
The U.S. Supreme Court has held that unless a business has a physical presence in a state, that state cannot collect sales taxes from it. So if my order went to Denver, the state could collect sales tax. But if it went to Minneapolis and that enterprise had no offices in our state, Colorado couldn't collect sales tax.
Now, the music store downtown not only pays local sales taxes, but it directly or indirectly pays local property taxes, most of which go to our schools. It employs local youths with nose rings to advise me on what Parental Advisory disks might be best for my children when I'm shopping for presents. The store contributes to local charities, its owner participates in community activities, etc.
And yet our sales-tax structure rewards me for doing business with Remote Megabusiness, which knows Salida only as a zip code.
That hardly seems fair, and so that's why there is some merit in Romer's proposal that states and localities find some way to collect sales tax on Internet transactions.
But on the other hand, a local retail shop creates local tax burdens that Remote doesn't. The local retailer wants the police to shake his door at night, to keep an eye out for burglars, to enforce parking regulations, and to come and arrest suspected shoplifters -- law-enforcement costs that my Internet transaction with Remote does not cause. Remote isn't ever going to call the Salida Fire Department, or bring a case before the municipal court, or attempt to organize a secret meeting of the city council and thus incur litigation costs if some uppity citizen or nosy newspaper objects.
Since taxes, to some degree, should be based upon how much burden an activity places on the community, and since Remote doesn't demand anything from the community, what's the need of taxing my trade with Remote?
Our governor would probably argue that the town, county and state need the money they'd get by taxing Remote -- even though they've generally got more coming in now than they can legally spend under the TABOR amendment.
But if he really wants to tax the Internet, then there are some other aspects of it that should come before retail transactions. Even my most taxophobic libertarian friends might support some of these:
· Mysterious Disconnect Fee. Every time you're connected, and then you hear the modem clunk just before the system locks ups, a $10 charge would be levied against the computer maker, the modem manufacturer, the maker of the browsing software, Microsoft, the telephone company and the Internet service provider.
That's $10 for each one of them, not the party that might be at fault. If we tried to do it that way, each one would just blame the other, as they do now, and the $10 would never be collected.
Since this must happen hundreds of times each day in Colorado, the state treasury would either be rolling in the money, or all these companies would get their act together. Either way, we can't lose.
· Bloated Web Page Surcharge. Any Web page which takes more than 10 seconds to load under normal circumstances incurs a fine of $100 per additional second.
If I want fancy backgrounds, blinking commercials and animated ads, then I'll watch TV. I want information from the Web, and I get stuck waiting for these bloated abominations to load, just so I can click on something they point to.
The Web-site owners may derive some commercial benefit from forcing us to look at their slow-forming screens -- all the better reason to tax them.
· E-mail Tax. Charge one cent for each e-mail sent out. I use it a lot, but that would still amount to only $5 on a busy month.
I would consider it money well spent if the same tax applied to the geek who sends out 10 million get-rich-quick messages each day. His taxes would come to $3 million a month, and if this tax put these spammers out of business, so much the better.
It's probably inevitable that the Internet will get taxed. But our politicians could serve us well if they applied the taxes properly.
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