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August 3, 2016

Republican Platform Opposes Expansion of State Tax Power Over the Internet

 

In recent years there have been a number of attempts by a handful of states and their revenue-grabbing enablers in Congress to unconstitutionally expand state power to tax across state lines on internet purchases. Each time the name has changed—most recently it was called the Marketplace Fairness Act—and many attempts have been made to attach it to “must pass” legislation, but each time congressional Republicans have seen through the smokescreen and have turned back the attempt.

Certainly the brick and mortar retailers would seem to be facing a disadvantage. If you make your purchase from the store down the street, you pay sales taxes. But if you make the same purchase on-line from another state, you may not have to pay sales taxes. It all depends on whether a retailer has a physical presence in your state, and many do not.

Any proposed solution must pass constitutional muster, however, and the Supreme Court has found that states exceed their constitutional authority if they force retailers in other states to collect taxes for them. The problem may seem unfair, but the solution is unconstitutional.

Relying on Congress’ fidelity to the Constitution is not always a safe bet, however. It’s generally been House Republicans who have been most resistant to expanding states’ tax authority, while most Democrats happily sign on to any measure that increases tax revenues anywhere, under any possible rationale. But even Republican opposition seems to have been eroding over time.

That’s why we’re particularly happy that the 2016 Republican platform contains new language that pretty clearly opposes an expansion of state power to levy new taxes, a la the Marketplace Fairness Act. Under the Government Reform section, the platform contains the following language:

We will consistently support internet policies that allow people and private enterprise to thrive, without providing new and expanded government powers to tax and regulate so that the internet does not become the vehicle for a dramatic expansion of government power. (p. 32)

That sounds pretty open-and-shut to us.

Politicians don’t always feel obligated to support every line of their party platform, but in the current election cycle, when the nominee of the Republican Party feels free to make up positions based on applause meter readings, the party platform may have renewed importance as a touchstone of the positions of the vast majority of Republican voters. It’s good news that it rejects unconstitutional tax grabs by the states.


 

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