Although the debate around states taxing Internet and catalog sales has gone on for years, it has reached a new level of interest recently due largely to incidents involving online retailing giant Amazon. In addition, new laws have been proposed in both the Senate and the House in regards to these issues.
However, Adam Thierer, a senior research fellow with the Technology Policy Project at the Mercatus Center at George Mason University, doesn’t think that either of these bills offers an effective solution to the problem. He told WebProNews that these laws would essentially give states the authority to create a system for collecting Internet sales taxes, which he thinks would tax everyone at a higher level.
He co-wrote a paper with Veronique de Rugy and introduced 3 different approaches to the problem. The first option abolishes sales taxes completely. The second would implement a nationwide sales tax that would give states a certain portion of the income. While both of these serve as options, Thierer doesn’t favor either one.
Instead, he is pushing an “origin-based sourcing rule” that would tax consumers at the origin of sale and not where the destination takes place, which is the approach that the states are taking. Thierer told us that this method would help to increase tax competition between states, eliminate constitutional tax headaches, and keep interstate vendors from having to deal with complex tax systems.
Do you think this sounds like an effective plan?