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United States

Internet Taxation May Be Imminent 859

redfenix writes " Here, there, and everywhere, the words "Internet Tax" are being uttered with intentions of bolstering state budgets. It may be inevitable that products purchased on the net will be taxed someday. The real question is: can the fragile internet economy really help local tax economies now?"
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Internet Taxation May Be Imminent

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  • by connsmythe96 ( 576445 ) <slashdot@adamkemp . c om> on Monday January 13, 2003 @08:58PM (#5077177) Homepage
    Umm...I learned in school that the constitution specifically forbid states from imposing tariffs (i.e., taxes) on other states' businesses. That would include sales made over the internet. Unless they taught me wrong, of course. Which is highyl possible with our education system. ;)
  • by Alien54 ( 180860 ) on Monday January 13, 2003 @09:00PM (#5077190) Journal
    I keep telling people to push a Spam Tax instead.

    This will solve several problems, and make the states lots of money. Also, there is plenty of precedent for taxing spam as part of interstate commerce.

    Forced registration of spammers (a spammer's license) would enable people to track them down (spam hunting) and make money from the spammers. Money strapped countries around the world could get on board with this one.

    The extra bonus brownie points for having a bounty on spammers avoiding the law just sweetens the deal. And Spamming would no longer be a free ride on the back of the internet.

    This is a match made in heaven.

    Why not use the greed of the law makers to our advantage?

  • Another view. (Score:1, Interesting)

    by forand ( 530402 ) on Monday January 13, 2003 @09:08PM (#5077256) Homepage
    Disclaimer: I am not sure I agree with what I am going to say but I have to say it does make some sense. If internet retailers were required to collect taxes based on the purchaser and return those taxes to the pertinent state it would seem reasonable since: 1) In essence their business has a presensce in every State and thus should follow current laws(the location of a internet server means nothing these days) 2) If I have the abilty to buy things without tax I will stop buying things in my own state and thus not be supporting the infrastructure that I use. This is already done within California with sales tax on cars. The sales tax you pay is based on where you live NOT where the business is, this was implemented to stop people from all buying their cars in the boondocks to save some money but they go and drive their cars all over the streets their tax dollars were not supporting the maintanece of.
  • Re:Enough (Score:1, Interesting)

    by Anonymous Coward on Monday January 13, 2003 @09:13PM (#5077295)
    Bull. $9000 a year is 1) riduculous 2) still not nearly as much as we pay to clothe feed and otherwise coddle murderers and corporate thieves.

    I'd be happy to see your "evidence" of $9,000 a year on a student. Is this the same people who take a state's entire education budget, and erroneously only divide that budget by the numer of K-12 students, ignoring all the other money provided to higher education?
  • by fishbert42 ( 588754 ) on Monday January 13, 2003 @09:18PM (#5077332)
    The problem with a "spammer's license" is that enforcing restrictions on one could easily be tied with the issue of corporate free speech [yahoo.com] -- something the Supreme Court has on its plate.
  • by Phroggy ( 441 ) <slashdot3@ p h roggy.com> on Monday January 13, 2003 @09:20PM (#5077352) Homepage
    It's called a "use tax", and every state has one.

    Every state? I live in Oregon, and we have no sales tax (thank God). We have income tax and property tax, which are much easier. Why would I have to pay taxes on something I buy online if I don't have to pay taxes on something I buy at a brick-and-mortar store?
  • by aquarian ( 134728 ) on Monday January 13, 2003 @09:20PM (#5077357)
    All this does is reinforce the positions of the current big ecommerce players -- Amazon, Wal-Mart, K-Mart, etc. -- because they can most easily afford the software upgrades and new software packages/services that will be required.

    A lot of small businesses found new life on the internet, becuase they were able to extend their reach. Now they're faced with huge new expenses to either develop new software themselves, or be chained to a third party who can. Unfortunately, this will probably Microsoft, Intuit, Yahoo Store, etc., who will rake in a fortune selling new ecommerce-in-a-can systems with tax tables built in.

    I have a couple of clients who were thinking about expanding into web sales in the next year, but in light of this will probably nix the idea.
  • by 3seas ( 184403 ) on Monday January 13, 2003 @09:22PM (#5077368) Homepage Journal
    US Military Budget this year is something like $780 billion US dollars. The ten year tax reduction plan Bush is babeling about is $670 billion over a ten year period.... In other words we are being given a tax break that is less then ten percent of the US military Budget, this year alone.

    Now where is the government getting all that money from?

    As to taxing the sale of products reguardless of what state the company and consumers are, via mail order (internet is just a means of communication) some companies (few) do it in a manner that the state the consumer is in determines what the tax is and also gets the money.

    And what is taxes being spent on? Warmongering!
  • Everyone pays S&H (Score:2, Interesting)

    by fname ( 199759 ) on Monday January 13, 2003 @09:31PM (#5077429) Journal
    The S&H charge when ordering from online only stores is nothing more than a relic of when the stock came off the store floor. Now, most items never see a B&M retail outlet. B&M don't tack on a S&H charge that they obviously incur in delivering the product to the store. It's called the cost of doing business. Etailers itemize S&H b/c they can get away with it.

    Do you really think that it costs Amazon more in S&H charge to deliver a book to your house than it costs Barnes & Nobles? B&N has to deliver the items from their warehouses, stock the shelves, etc. Amazon ships stuff to the warehouse. When you order, they they don't ship it right away with free shipping. Instead, they probably move items by the truckload to enable them to send things in smaller batches.

    Plus, that S&H charge is often a well-provided service. It's a lot easier to get it delivered to my door than to make a special trip to buy something. Really heavy stuff (TVs) cost a lot to ship, so then it makes sense to buy it in person. But bottom line, basic S&H charges should be included in the cost of goods.
  • Re:So.. (Score:3, Interesting)

    by NoMoreNicksLeft ( 516230 ) <john.oylerNO@SPAMcomcast.net> on Monday January 13, 2003 @09:40PM (#5077486) Journal
    My state/nation gave up whatever moral right it had to sales tax, when it started taxing income.

    So I dont't really give a flying fuck if they're eating it or not. They tax spending, they tax saving, and the only thing they encourage is earning no income at all. Sorry, but if they want to play these games, they'll have to do better. I actually know my way around the net.
  • Re:Interstate taxes? (Score:2, Interesting)

    by Engage the World ( 597787 ) on Monday January 13, 2003 @10:17PM (#5077701)
    I live in MA and you do have to pay MA sales tax on automobiles, even if you purchase the vehicle in sales tax free NH. I also know that any goods bought outside the state can be subject to a "duty" tax, if a police officer stops you when you cross the border. at least this is the case when buying large quantities of alcohol in NH (where liquor is also cheaper than in MA). I've acctually seen state troopers pulling cars over as they crossed the border just to impose duty taxes on liquor purchased in NH. They normally only do this around large "drinking" holidays, ie. new year's & the 4th of july, mostly when the state (MA) is in desperate need of funds
  • by neurostar ( 578917 ) <neurostar@NosPAM.privon.com> on Monday January 13, 2003 @10:19PM (#5077717)

    I think it's a big mistake at this point to specifically tax internet sales. I purchase goods off the internet because they're cheaper than in retail stores. The prices are usually just barely cheaper after shipping. However, they are cheap enough to more than offset the delay in receiving the product.

    Since I'm currently in New York State (which has outrageous taxes, at least compared to Idaho), I am often taxed for internet purchaes. For example, ordering from CDNow [cdnow.com] (which I did before they were 'swallowed' *cough cough* by Amazon.com [amazon.com] it was about the same price ordering from them (after shipping and taxes) as buying the same $18-$20 CD from a retailer. It simply wasn't cost effective. I only continued because I don't have a car to drive to stores :(. If they start taxing internet sales, it won't be worth waiting a week to get a product that I'll end up paying full retail for. It will destroy online stores. I for one won't buy from them, because it won't be cost-effective for me.

    <soapbox>

    IMHO, states should think about eliminating unnecessary government programs instead of looking for more revenue. That's the best in the long run. It ensures a fiscially responsible government that isn't bloated. It also allows private companies (who can do the jobs for cheaper) to save money and provide better services.

    </soapbox>

    neurostar
  • by saskboy ( 600063 ) on Monday January 13, 2003 @10:27PM (#5077764) Homepage Journal
    Frankly anyone who know anything realizes that an "Internet tax" would be hell for governments to implement and regulate.

    People already have to pay taxes for things bought on the Internet, and do pay them if they are imported from another country. Customs looks at the sticker on the package, calculates the duty and tax, charges a fee for handling, and presto - Internet Tax.

    This is not new stuff to anyone who sells on eBay for example.
  • Re:So.. (Score:5, Interesting)

    by yog ( 19073 ) on Monday January 13, 2003 @10:41PM (#5077827) Homepage Journal
    There is no internet economy, you say? There are people making money off the internet who used to be school teachers or accountants or lawyers. Now, they have web sites and sell some product or service to the world via internet technology. People get things done by internet that were impossible or very difficult before, such as telecommuting. There exist online courses that there was no equivalent before except maybe closed circuit TV. Forums for exchange of ideas such as this one. Software and music downloading, whether for free or fee. And on, and on. Therefore, I put it to you that by definition there is indeed an "internet economy". How big it is, is open to debate, however.

    Living in Massachusetts, I was able to buy a gift item from a store in southern Texas simply because I found them on the web and they had what I wanted, a relatively hard to find type of sand pendulum for someone's desk. They did not have to lift a finger; I found them via a web search. Internet technology enables this store to have a national presence for merely the cost of a few static web pages. That, I would argue, is an internet economy.

    As for internet sales tax, it's a bad, stupid, unenforceable thing. The conventional wisdom is that it's folly to raise taxes in a recession; it can only hurt. Perhaps these states which spent so freely during the boom years should have put more away for a rainy day, just as private citizens are supposed to do. History has shown that we have a cycle of boom and bust.

    But they'll never learn.
  • by nfras ( 313241 ) on Monday January 13, 2003 @10:42PM (#5077830)
    I have a few situations which US lawmakers may need to look at.

    1.If I (a foreign national) visit the US and buy goods subject to sales tax, when I leave the country I am able to claim this sales tax back. How does this apply in this situation when I do not physically arrive in the US and I do not physically leave?

    2. I (hypothetically) own an e-commerce business based in Australia. If I sell goods to a customer in say, California, will I be required to charge them a Californian sales tax? If so, how will the state of California ensure that I pay the tax to them. They have no recourse through the californian courts as I have no material resources in California and any judgement against me would be ineffectual. They have no legal recourse under Australian law as Californian legislation is overidden by Australian federal or state(NSW for the sake of argument) law.

    3. I reside in Australia. I use my credit card to buy a book online at Amazon.com. I ask for the book to be sent to the UK. As Amazon has UK offices they elect to send stock from there rather than ship the book across from the US. Who gets to levy the taxes here? The purchaser is in Australia, the vendor is in the US (I forget which state) while the goods are in the UK.

    It seems to me that this is a mad grab to try and get money which the states feel they are losing out on. My personal feeling is that the entire thing is unworkable and that the effort will not be worth the end result.
  • by JimBobJoe ( 2758 ) on Monday January 13, 2003 @10:48PM (#5077858)
    States had been pushing for internet sales tax for some time now...but now everybody's got a bee in their bonnet to see it occur. States feel that they are losing big bucks now because people are ordering online (though their calculations are only thinking about the internet sales going to their state, not necessarily the opportunity cost of jobs and stuff that may be created in their state because of internet commerce.)

    Thing is, states have screwed themselves with progressive income taxes. Sales taxes do go up and down with consumption (obviously) but not as severely as income taxes. California for instance has this really progressive system where the top 10% of income earners are paying for some 75% of California government. So, the economy takes a tumble, income generally does go down...but the top 10% of income earnerrs have *huge* decreases in income, so suddenly California has a $25 billion shortfall. They can't increase the progressivity of the tax structure--you're not gonna get much more out of people who's income's dropping severely, so all ya can do is widen the tax base...meaning increase income taxes for median earners, or sales tax, or find new tax sources. I believe states are starting to understand how easy it is to screw the pooch raw with progressive income taxes (note that the states that have blown their budgets the most are those with income taxes, CA, OR, OH, IL, NY, whereas non-income tax states like TN, FL, NH, TX, are not looking at such bad looking budgets. Those states have much more reliable income streams from property taxes and/or sales taxes.)

  • by MacAndrew ( 463832 ) on Monday January 13, 2003 @10:53PM (#5077880) Homepage
    I have yet to meet anyone who files a use tax return, let alone keeps track of their purchases.

    The only intelligent way to implement this is to require the merchants to collect it under some sort of interstate compact -- "we'll enforce your sales tax if you'll enforce mine."

    One correction: the IRS is perfectly able to compel you to turn over your records pursuant to an audit. Your documents are not testimony. So, if you want to avoid prosecution using the 5th, you have to keep everything in your head.

    Here is the basic logic (from a Supreme Court case described in the IRS manual [irs.gov]):
    In United States v. Doe , 465 U.S. 605 (1984), grand jury subpoenas were issued to a sole proprietor demanding production of business records. The Supreme Court held that contents of the records are not privileged. Where preparation of business records was voluntary, there is no compulsion, and the Fifth Amendment is not violated. "A subpoena that demands production of documents does not compel oral testimony; nor would it ordinarily compel the taxpayer to restate, repeat or affirm the truth of the contents of the documents sought." The Court held further that the act of production was protected by the Fifth Amendment privilege and could not be compelled without a statutory grant of use immunity pursuant to 18 U.S.C. 6002 and 6004.

    The last sentence means that where the act of production itself would be incriminating -- not just the contents of the documents -- the Fifth may be implicated. But then you still have to show a reasonable likelihood of criminal prosecution, and the IRS could always grant use immunity if they just want the money.
  • by prisoner-of-enigma ( 535770 ) on Monday January 13, 2003 @11:02PM (#5077916) Homepage
    Don't forget to thank the Democrats, as they're pushing this like nobody's business. Bush, on the other hand, is more closely aligned with the business-friendly Republican party, and they are against this sort of thing.
  • Re:So.. (Score:3, Interesting)

    by standards ( 461431 ) on Monday January 13, 2003 @11:07PM (#5077929)
    50 states? Plus all those non-state entities... cities and protectorates have sales tax too!

    But you know what? The tax would be easy if it weren't for local rules... MA has 5% sales tax. Easy, eh? Well, it is until you consider the exceptions: The first $150 of clothing sales are tax free. Food is tax free (what is food?). Books? I forget. And that's an easy state. CT actually defines "luxury foods" that are taxed, like potato chips and soda! Think of it as a "poor tax".
  • by Xerithane ( 13482 ) <xerithane.nerdfarm@org> on Monday January 13, 2003 @11:08PM (#5077932) Homepage Journal
    Every state? I live in Oregon, and we have no sales tax (thank God). We have income tax and property tax, which are much easier. Why would I have to pay taxes on something I buy online if I don't have to pay taxes on something I buy at a brick-and-mortar store?

    Which is why our property and income tax is higher. It's great if you are renting, and have tax deductions thought. Oregon also has a few laws setup to make being a high wage earner less appealing than in other states. That's why a lot of people live in Vancouver and work and shop in Portland.

    Tax law confuses the hell out of me though. I used H&R Block and even they screwed up my taxes, so I am grateful it's not just me.
  • Re:Interstate taxes? (Score:3, Interesting)

    by benzapp ( 464105 ) on Monday January 13, 2003 @11:11PM (#5077945)
    So its sales tax on any vehicle you REGISTER in MA without a prior registration elsewhere.

    This is something of a moot point, since it is also illegal to drive a car which is unregistered. So perhaps you can stash that car you purchased without sales tax in your garage, but what good does it do you.

    Its the same reason the IRS has to force you EMPLOYER to tell them about your earnings, they can't make you tell them you failed to claim it all.

    Its not like they NEED your confession. When it comes to duties, fairly broad discretion is allowed. Don't forget the whiskey rebellion which occured in western MA in the 1780's. Washington brought in the army to get them to pay.

    I am only replying because the history of turning employers into tax collectors is rather interesting. They never needed a confession for that, but they could always make you produce receipts or have your employer testify, or their accountant. Income Tax has always been a touchy subject, which is why it was reserved for the rich only until WWII.

    The payroll tax was implimented during the war because they started to tax EVERYONE, even the little joe as they do now. The government just didn't have the manpower to enforce it, so they put the burden on the employers. It was almost like conscription. The average worker would have just said fuck it, what did he have to lose. (Most people back then were tenants, they all lived month to month.. they really DIDN'T have anything to lose) But obviously owners of companies did. So, thus the predicament.
  • by plague3106 ( 71849 ) on Monday January 13, 2003 @11:16PM (#5077960)
    Hmm...here's some reasons why.

    I shouldn't HAVE to pay sales tax to a state i don't live in if i'm not in it. Thats taxation w/o representation...maybe you've heard of the idea before?

    It will hurt internet sales even more. One reason people buy from the net is because its a bit cheaper because there is no sales sax. If this is the case, people may stop buying on the internet, and smaller shops may be forced out of buisness. This would cause job loss and actually lower the amount of revenue a state takes in. Not only did they lose the sales tax, they lost the other taxes paid by a running buisness.

    You said it yourself; most tax money is wasted. So your solution is more tax? Thats pointless, the state will mismanage its new source of revenue just as bad as it mismanaged its other revenue. Raising taxes when there is waste is not logical.

    Hope i gave you some things to think about.
  • by silentbozo ( 542534 ) on Monday January 13, 2003 @11:18PM (#5077966) Journal
    No kidding. Here in California, Davis' spin doctors are downplaying the negative impact that his proposed taxes (including a internet sales tax) will have on the tax base. Who the hell is he kidding? What tax base? Who the hell wants to hang around and have their kids go to shitty schools, use poor infrastructure, and still pay a premium tax on everything?

    If the politicians up in Sacramento are so concerned about the budget and the common man, why don't they voluntarily return half of their salaries for the year, and forgo staff perks? Spare me the bullshit about needing money to attract top talent, since it seems to attract the wrong kind of talent. If I were Davis, I would have announced that I was voluntarily forgoing my paycheck for the year, and urged that other state employees do the same. Obviously you wouldn't do that if you were a *real* employee, but plenty of politicos would have been pressured into focusing on fixing the problem.

    What he has instead is a recipe for disaster. It's like watching the HP/Compaq merger all over again - a slow motion train wreck...
  • by neurostar ( 578917 ) <neurostar@NosPAM.privon.com> on Monday January 13, 2003 @11:50PM (#5078151)

    This is a collection of preconceived misconceptions. First, let's discuss "unnecessary government programs." Typically, these don't exist...

    Well, that's your opinion. Without trying to get into a flame war... I'll explain my position.

    I'm a Libertarian [lp.org], so I feel that the government should be there to protect the nation, provide basic services (mail, justice system, etc). Not included in the list of necessary services are things such as: Public Schools, Welfare, Social Security and programs of the like. I feel that those government services should be better taken care of by non-government organizations, or eliminated all together. I know these are controversial topics, but that's my opinion.

    Now let's address the other issue - the mistaken belief that a private company can save money and provide better services than a government agency. You are 100% mistaken on this count...

    I agree that many companies are mismanaged. I realize now that I put down the wrong thing on this issue. I was refering to non-profit corporations. My main focus with this point (which I didn't explain in my original post, sorry about that) was government's role in services such as Welfare. In this area, locally based non-profit (and religious) organizations are much more effective at distributing aid to those in need. Those types of organizations are simply there to do good, and they don't have the type of overhead that government has, because many of the people are volunteers. So they can generally do things for cheaper.

    The most common opposition to this point is that people are too selfish to give to these types of organizations. While it's true that no everyone would donate, there are many people (I have met many) who don't give at the current time because they are under the illusion that Welfare is enough. And as one can see, welfare hasn't exactly solved the problem. So, if Welfare was elminiated, people would be giving money to these more efficient, charity organizations. They would be motivated to do so because it's a tax deduction as well as the fact that it's the "right" thing to do (forgive the sweeping generalization).

    If you are interested in learning more about my position, I'd recommend taking a look at the Libertarian Party Issues Page [lp.org]. They explain things much better than I ever could.

    Sorry for the confusion in my earlier post.

    neurostar
  • The *real* question (Score:2, Interesting)

    by duncan bayne ( 544299 ) <dhgbayne@gmail.com> on Tuesday January 14, 2003 @12:39AM (#5078375) Homepage

    The real question is 'is compulsory taxation moral'? I, and many others, argue that it isn't [bomis.com].

  • by mccoma ( 64578 ) on Tuesday January 14, 2003 @01:18AM (#5078595)
    until recently I was in the "high" income bracket as defined by the Democrats (>$100k) and I got a huge chunch of my check taken out. My friend and his wife are still in that bracket and are getting killed by taxes. The myth of the upper class paying zero taxes is just a political argument to generate hate so Democrats can get elected.


    "Progressive" taxes aren't. This class warfare stuff is really starting to get to me. All it does is get in the way of building a tax system that doesn't require me to hire / be an accountant.


    We need a flat tax with a high minimum deductable (to keep all the kids / summer jobs out of the paperwork). Perhaps a $20k deductible with a flat percentage after that. Treat everyone as an individual (no lumping spouse in with you / marriage penalty). No deductible for children or interest on homes (we want people to save after all). Do not tax interest on savings (need more money for people to borrow).

  • by NightHwk1 ( 172799 ) <.ten.ksalfytpme. .ta. .noj.> on Tuesday January 14, 2003 @01:20AM (#5078602) Homepage
    If this becomes law, how would the government determine what was actually purchased online?
    Wouldn't businesses simply find some kind of loophole like reporting all their sales as mail orders?

    That brings me to my next point... that the internet is not a physical place. In this case it is just another communication method, like a phone, or the US Postal Service. If there is a tax placed on items purchased online, there will have to be a tax on everything else.
  • Re:More taxes? (Score:2, Interesting)

    by peter.westerstrom ( 65360 ) on Tuesday January 14, 2003 @01:39AM (#5078681)
    In Sweden (EU), the tax is 25%, for me 8.5% is almost like nothing :-)
    However I can buy from other EU countries that have a lower tax. In EU sales tax is payed at the rate for the country where the company is located.
    So in some sense we are having those taxes in EU already. And the Internet sales is much bigger in US, the tax is probably one big piece of the explanation for that I'll guess.
  • by Samrobb ( 12731 ) on Tuesday January 14, 2003 @02:45AM (#5078976) Journal
    We need a flat tax with a high minimum deductable (to keep all the kids / summer jobs out of the paperwork). Perhaps a $20k deductible with a flat percentage after that.
    I've always wondered about the resistance to a flat tax, particularly since most of those proposals eliminate taxes for those with the lowest income. The only thing I can come up with is that politicians want to maintain across-the-board taxes so they can continue to "reward" some earners by providing tax cuts (generating votes), and "punish" other earners by takeing a proportionally higher percentage of income (generating votes in a different way, I guess...)

    You would think that your type of proposal would appeal to the vast majority of people. Low income earners would not have to deal with paying income taxes at all. Middle range income earners would pay less in taxes overall, thanks to the deductible. High range income earners would see very little change in their tax situation, except that they would have the benefit of having a stable tax rate to deal with. The government would be able to save money currently spent enforcing the tax code. Congress would spend less time passing absurd tax legislation.

  • by BSquirrel ( 50056 ) on Tuesday January 14, 2003 @08:20AM (#5079740)
    why should "online" stores have an advantage over brick-and-mortar stores?

    Exactly. So every "brick-and-mortar" store should be required to ask for proof of residency and collect sales or use tax for every state in the country.

    why should brick-and-mortar stores have an advantage over "online" stores?
  • by cookiepus ( 154655 ) on Tuesday January 14, 2003 @08:35AM (#5079771) Homepage
    Let me put it this way...

    If you make no money, you don't get taxed.

    Depresed market, my ass. If a company has something to offer, it does well, whether it's .com or not. I happen to work for a site that depends 100% on web sales. When people bitch to us about a depressed market, we make a point of looking at them and saying "huh?"

    Cuz.. you know.. we have something to sell, and we sell it affordably.. and people need it.. so they buy.

    DESPITE THE FACT THAT WE'VE BEEN COLLECTING SALES TAX ALL ALONG.

  • by hey! ( 33014 ) on Tuesday January 14, 2003 @10:16AM (#5080298) Homepage Journal
    If everyone contributes an equal amount to the public purse, then everyone should have one equal vote. But a minority contribute far, far more than they will ever get back, and another significant group who get back much more than they ever contribute.

    I like your way of analyzing the problem. However, I beleive the assumption above is wrong, and so I disagree with your conclusion.

    Let's take any particular billionaire, Mr. Gates for example. In terms of what he receives directly for his tax money, you are absolutely correct. In fact I'd go further to say that every taxpayer receives less than the amount he pays in direct, excludable benefits, unless he makes his living largely off of government contracts (as I have done in the last few years).

    But that's not the point. Could Mr. Gates had made the money if there had been no publicly funded research into computer technology?

    So, perhaps Mr. Gates is a bad example. How about Warren Buffet? Would he have made the money he did if there were no public education system to provide the companies he invested in literate workers? If there were no public roads to transport their goods? If there were not defense establishment to protect their wealth? Or the SEC to enforce shareholder rights?

    Compare this to the guy who fixes my house. He benefits by being able to drive over the public roads to get to my house, but the vast majority of his wealth comes from his labor and his private capital, which amounts to his personal tools and training he uses on each job. In other words, his capital's productivity is mostly dependent upon his labor and talents. For wealthy people, more of their wealth comes from investing their capital in ways that are dependent upon public goods. For that reason, I would even venture that the wealthy get proportionately more benefits than the working class. Only people on public assistance get more in relative terms (although probably less in absolute terms).

    The first thing that needs to happen is for the tax payable to be fixed, and for the benefits to be equally available.

    I think this is a naive view. To tax people and distribute the proceeds equally would be a waste of time. Why tax at all in that case?

    Tax money, again, should be spent the way any money is spent wisely -- for the greatest marginal benefit. The reason you need taxation is for public goods -- goods whose value cannot be exclusively enjoyed by a consumer, but whose benefits must necessarily be shared. For example national defense. If I don't want to pay for national defense, I can't avoid getting the benefits of it. I may not want to pay for universal literacy, but unless I live out in the hills and opt out of the money economy altogether, I can't avoid getting the benefits of it.

    The problem with these public goods is that each person cannot be entirely responsible for how much he spends on them, because human nature being what it is, most people would spend zero if they could still receive the benefits. The only way to do it is to decide as a group how much each person will pay. Of course, if you want to you can always contribute more. I did last year by donating my federal tax cut check to my local school system, because I believe that as a nation we don't spend enough on education.

So you think that money is the root of all evil. Have you ever asked what is the root of money? -- Ayn Rand

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