Monday, April 25

Shipping Tax Proposal

Whereas, the growth of online sales has undercut the sales tax base that has traditionally sustained state and municipal government and services, and whereas it would be a hopelessly muddled mess to charge online vendors with the responsibility of collecting sales taxes for hundreds of thousands of local entities, I propose that we consider a uniform national "shipping tax."

Here is how it would work.
  1. Shippers would collect a percentage of the value of the merchandise that they ship to non-retail customers. (The tax is not on the sale of the items but on the shipping of them.)
  2. Said tax would be forwarded to the federal government.
  3. The federal government would then each month forward 100% of the amount collected to state and local government entities.
  4. Apportionments to the state and local entities would be based strictly and solely on the population base in the entity. (No special deals. No special projects for some communities. Everyone is treated the same.)

Now, I know that some people will dismiss this idea outright because they believe that they already pay too much in tax or that the last thing we need is another kind of tax. But my experience has been that the people who are most vocally opposed to taxes are just as demanding as everyone else when it comes to quality roads and public safety. We need to be realistic. The money has to come from somewhere. And the reality is that times are changing and we can no longer rely on sales taxes. 
There are two reasons that a shipping tax is a good idea.

First, it has the potential of leveling the playing field between brick and mortar retail (which is required to collect sales tax) and the online vendors who can currently undercut retail vendors because they are not required to collect taxes. This could indirectly rejuvenate some forms of local retail.

Secondly, this is a way to fund local and regional government services which are currently losing out because of the shift away from local retail.

I believe that this will work if we can keep the system and formulas simple. What do you think?


Justin said...

Two words: "free shipping". Some big retailers already do it for most items. If shipping is taxed and the retailer needs to compete, they'll absorb some of the shipping cost, hide some of it in the item cost and advertise free shipping and tax free shopping.

I say tax the item at the state rate. Don't hold e-tailors responsible for local/regional rates.

Eric said...

I dunno... It is based to much in common sense. Congress might reject it due to that.