06 May 2013

It's a short step from local sales taxes to local licensing requirements

In fact it's not really even a step between them. More of a phlegmatic shuffle. The kind that obese women in air-brushed cat sweatshirts always seem to do right in front of me in airports when I'm most in a hurry. But I digress...
Coyote Blog | Warren Meyer | Licensing is Anti-Consumer

That is an advantage of the Internet I had never considered -- it allows new businesses to challenge old ones without harassment by local licensing and zoning authorities.
This is, in one sentence, why I oppose an internet sales tax. I'd rather see far more government revenue be consumption taxes, so to a first approximation I ought to support this. But I don't. It is a bad idea.* (I don't know how to say it any better than that.)

Internet companies aren't beholden to local busybodies, and we need to do whatever it takes to keep that camel from getting its nose under the tent. One of many lessons from ObamaCare ought to be that the line between a ban, a penalty, and a tax is blurred to the point of irrelevance.

One idea I think I could be convinced to back would be a single, Federal-level internet sales tax. Then online companies still have to collect sales taxes, so physical sellers aren't at a permanent price disadvantage, but you don't have the same distortions or little-guy crushing regulatory burdens that we're going to get from the plan Congress is working on.

* See Megan McArdle:


  1. Online sales could be tax at the level appropriate to the server location. Then we could have some tax rate competition.

  2. Taxed. That should say taxed.

  3. Hmmm... what would you do about CDNs?

  4. The perennial argument against a Federal sales tax, of course, is that it will probably wind up being an addition to, rather than a replacement for, existing taxes.