Everything.

How does this happen? A buyer and seller come to agreement on the cost of something. The buyer gets out his money to pay for it, and the seller says “Wait, I have to add the sales tax.”

How much is the sales tax? Depending on where the transaction is taking place, the state, county, town, city, and who knows what other government, wants “their” percentage added on. What percentage? Well, that depends on where you are – and how many of those governments are reaching into your wallet to take your money, and how much each of them thinks it can get away with. For example, in New York City, the rate is 8.875% – 4% going to New York state, 4.5% to the city, and 0.375% for the Metropolitan Commuter Transportation District – and that’s not the highest rate in the country: According to the Tax Foundation, that ignoble title falls on Birmingham and Montgomery, Alabama, each with a 10% tax rate.

We now return to our regularly scheduled transaction, already in progress. The seller announces a new price, not the one that had previously been agreed on, but a higher one that the buyer has to cover. The hapless buyer pays the new price, feeling shafted, and the seller, if he has any morals at all, feels guilty about taking more than they’d agreed on in the first place.

Admittedly, the seller doesn’t get to keep any of the additional money he collected as sales tax, he just has to hold onto it, keep track of it, and at the end of the month, or quarter, or whatever the local rules say, promptly send it off to the government(s) in whose name he collected the tax.

Do you see something else wrong with this picture? How much does the seller get paid for collecting, keeping track of, and sending the sales tax to the government(s)?

Zero.

That’s right, the seller is an unpaid tax collector, extorting (tax) money from the buying public without receiving anything in return. Why, then, would anyone commit such a crime? Because if they don’t, the government(s) will confiscate their business, impose fines, or send the merchant to jail: The seller, under duress, is paying protection money to the government(s) to keep them off his back.

Now we have states arguing that because a buyer is in their state, that gives them jurisdiction over an Internet seller who is not in their state: They are trying to forcibly deputize every merchant in the country as their tax collectors – without pay. Instead of being a non-consensual unpaid worker (i.e., slave) for one, two or three jurisdictions as they are now, they want to have every business in the country collecting, counting and sending money to any jurisdiction a buyer happens to come from. That would be like saying if someone from Omaha got off a cruise ship and walked into a shop in Key West to buy something, the Florida merchant would have to collect and manage Nebraska sales tax. In addition to being a bookkeeping nightmare for American merchants, it will turn buyers to overseas sellers who don’t have these ludicrious rules to follow. This has to be stopped, or it’s going to destroy the American economy.

As of today, May 8, 2018, eBay has a petition they are circulating to gather voices against states being able to impose taxes on Internet merchants who are not physically located within their jurisdiction. Please go to https://t.co/JMhYbuZvlV to add your signature, it will only take a minute. The money you save will be your own!

How did this all get started?

Some time in the early 1930’s, during the USA’s Great Depression, many state governments were in danger of going bankrupt. In order to avoid such a failure, they would either have to cut expenses to stay within a balanced budget as a business would (heaven forbid!), or raise taxes. Raising existing taxes could only be done on a limited basis before a tax revolt took place, what they were looking for was something with a broad base, so lots of people could be taxed “just a little bit” but they’d make up for it in volume. A direct tax on labor didn’t seem like a good idea because it was feared it would endanger productivity. Instead, some genius in West Virginia or Kentucky came up with the idea of a tax on the sale of goods where every merchant in the state was deputized as a tax collector, whether they wanted to be or not. For the states, it was a win-win situation: They got lots of money so they didn’t have to worry about nuisances like balancing a budget, and they didn’t have to pay anybody to collect it. Once the pioneering states pulled it off, and got away with it, the idea spread like wildfire until nearly every state in the union has a sales tax. And if the state can get away with it, why not the county, or the city, or some other synthetic jurisdiction? After all, once the merchants had been convinced they had to collect the sales tax for the state, how could they object to collecting taxes for more localized governments?

It all stems from the “divine right of kings” (assumed by any government in power) to impose whatever laws and taxes on their subjects that they feel are appropriate. The fact it was elected officials who enacted sales tax laws does not make it a voluntary choice of the populace: It was the government adding a new cost onto the public without their consent: Did anyone vote for a legislator whose platform included adding a new type of tax on their life? No, it is, in fact, taxation without representation – it was an act undertaken by the government, for the government’s sole benefit, without asking for agreement from the governed.

Taxes, per se, are a crime against the populace, committed by the government imposing them: Without a prior agreement, stating what was being purchased, for how much, and under what terms, the government presents a demand for money to the subject being taxed. That person may decline to pay the demand on the grounds that they never agreed to it in the first place. However, the government will impose whatever sanctions it feels are necessary to collect the money until, under duress, the subject pays. This is a classic case of one entity initiating the use of force to cause another to do something against their will, or otherwise deprive them of their life, liberty and pursuit of happiness. That is the fundamental definition of the commission of a crime. I cannot imagine a rational argument wherein the mere fact that the action is undertaken by a government makes it not a crime: It may be lawful – conveniently, since the government wrote the law – but it is still a crime.

But, you say, the government has to have money to pay for essential services!

If the services are essential, people will pay for them when they use them if they are not already being subsidized, and therefore expected to be “free.” (Maybe railroads would still be viable if “free” roads weren’t sucking all of the traffic off them.) There are plenty of (business) models that can be used as templates for how to do this, even within the governmental system itself: Every toll road in the country adds more to the government coffers than it takes out. Water and sewer services are metered and paid for proportional to use. Similarly, if people bought police and fire department insurance, the cost of calamities could be spread across the populace without the imposition of taxes. Even national defense could be handled the same way: The government could offer broad-based “defense insurance” with a mix of services, or people could selectively buy “army insurance” or “navy insurance” or “air force insurance” depending on who they think is going to provide the best defense for the country. (I suspect the real “danger” with such a plan – from a government perspective – is that with such an option, people might not buy military insurance at all, and then we’d have to all just get along instead of parading our weapons systems all over the globe.)

Governments should be providing their services within a balanced budget just as any other corporate entity is required to. If a government wants to provide an unprofitable service, such as underwriting the cost of housing for disadvantaged families, it should be providing that service from the profits it makes on the other services it provides. Using taxes to arbitrarily pay for programs leads to spending without contemplation of the cost or consequences: It’s really easy to spend money when it’s not yours and you have a blank check in hand.

So, what’s wrong with sales tax? Everything.

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