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Like all segments of American life, the on-line
community
exhibits a fair amount of hypocrisy, as we
saw last week.
On one hand, there's the don't tax Internet
commerce
argument, and on the other, there's the
immediate appeal to the FBI to help investigate the hacker
attacks that shut down several popular commercial sites
last week.
As an American in good standing, I fully sympathize with
the implied conclusion here that we want the benefits of
government while someone else pays for those benefits.
As long as you're one of those getting the benefits while
avoiding the bill, this is a good deal, even though it's
not exactly a rational approach to public policy.
So, what would be a rational approach?
Let's start with the argument for taxing Internet commerce. It has been advanced by state governors of both parties. Our own Roy Romer, a Democrat, was opposed to any permanent moratorium on taxing on-line commerce. Gov. Mike Leavitt of Utah, a Republican, feels the same way, and another Republican governor, George W. Bush of Texas, has refused to support a permanent tax exemption for Internet transactions.
Their argument is that traditional brick-and-mortar stores have to collect sales taxes, and that local and state governments rely on these sales taxes to provide public services that everybody uses: streets, water, law-enforcement, parks, etc.
Further, the brick-and-mortar stores pay property taxes, donate to community activities, provide local leadership and support local media with their advertising -- they should at least be allowed to compete on a level playing field, rather than against huge entities that don't even collect sales taxes.
To put this another way, is it fair that the Tattered Cover must collect sales tax while Amazon.com doesn't?
On the other hand, local taxes are collected to pay for the services of local government. The local brick-and-mortar store needs the streets plowed after a storm, and a police department to call when it spots a shoplifter. Obviously, it creates more demands on local governmental services than a web retailer in some distant state.
The web retailer doubtless needs those and similar services at its headquarters -- but it pays property taxes there, and it doesn't produce a need for those services wherever its customers happen to abide.
Or does it? My street still has to be plowed and otherwise maintained if the delivery truck is going to reach my house, and having some police around presumably reduces the chance that my parcel will be stolen from my porch.
And, as we saw last week, the cyber-giants sure want some law-enforcement when they're unable to do business on account of deliberate traffic jams at their sites. That takes real agents drawing real salaries, not some novel form of virtual enforcement of virtual laws.
Then again, that's federal law-enforcement, financed by federal taxes, not local law-enforcement financed by local sales and property taxes.
This sure gets confusing, perhaps because our traditional way of organizing American affairs -- by geography -- makes less and less sense all the time.
In 1876, when Colorado became a state, it was easy to presume that nearly everyone here cared about silver mining and wheat farming. The boundaries haven't changed, but try to find a similar community of economic interest now -- and yet we've still got the same political structures.
I've got a congressman who gets most of his campaign contributions from the Front Range while complaining that every wilderness proposal represents an invasion by evil Front Range values -- and we're facing another census to determine where to draw congressional district lines, lines that don't seem all that relevant any more. Our congressmen increasingly represent interest groups, not geographic areas.
We just saw a young man who had never been in Colorado hauled to this state and charged with a crime here -- perhaps rightly so, since the victim was in Colorado, but still, another indication that borders don't mean much now.
But those borders, be they city limits or national boundaries or anything in between, still determine where taxes are collected and how services are provided. Just how our political and legal systems will adjust to this new reality is one of those questions that should be the topic of a debate among presidential candidates. They've all got some sharp people working for them, and we might benefit from their thoughts.
However, they'll probably devote their attention to matters they deem more important, like what flag should fly over the capitol of South Carolina.
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