Tax Man Knocking on Georgia’s Door Re Internet Sales

Tax Man Knocking on Georgia’s Door Re Internet Sales

By Gary Wisenbaker –

If you drive a car, I’ll tax the street,

If you try to sit, I’ll tax your seat.

If you get too cold I’ll tax the heat,

If you take a walk, I’ll tax your feet…

State legislatures around the country, even Republican controlled ones like Georgia, are resurrecting the lyrics of “Taxman,” the 1966 Beatles hit, as they look for new ways to pick the taxpayer’s pocket.

The getaway car for this latest heist? A tax on internet sales. Thus, an addition to George Harrison’s lyrics: “If you buy on line, I’ll tax that treat.”

The first attempt to tax online sales, made by North Dakota, failed when the Supreme Court ruled in 1992 that the state could not collect a sales tax on orders or goods sold by Quill Corporation to North Dakotans because Quill did not have a bricks and mortar presence in the state or any other kind of “nexus”. And doing so violated the Constitution since only Congress could regulate interstate commerce.

The Court allowed, however, that Congress could legislate permission to the states to collect such a tax. The brave men and women of Congress, being elected every two years, have demurred doing that for 25 years.

So that leaves the states to devise a constitutional-proof scheme on their own.

Take Georgia, for example. This is a state firmly in GOP hands: both legislative houses and all constitutional officers from governor to state school superintendent are Republicans. It is a conservative state.

A bill to collect sales tax from online retailers, however, has been introduced and may likely pass.

It is estimated that roughly $5 billion worth of online or mail order sales go untaxed each year. The booty the state stands to collect is as high as $274 million with an additional $200 million for local governments. Nearly half a billion dollars, no chump change here.

And if the non-state retailer declined to collect the tax, they would be required to send out “tax due” notices to their customers with a copy to the state’s Department of Revenue.

This, according to Steve DelBianco of NetChoice, amounts to “tattletale reporting” since the notice would divulge information to the state about an individual’s “health concerns, political leanings, sexual orientation, personal tastes and financial status.” Such an encroachment on personal privacy would have the Founding Fathers spinning in their graves.

Now, understand that Georgia’s sales tax revenues for January 2017 approached $1.1 billion, or three percent over 2016 and the state’s “rainy day fund” is in excess of $1.6 billion. It has a constitutionally mandated balanced budget, is contemplating pay raises for state employees (which are paid for), and its transportation department is flush with cash.

That this fiscally conservative and well managed state with a budget surplus wants to take an additional $474 million from its citizens is somewhat sideways with any real necessity.

The tax is justified, the proponents say, by “fairness”. The “playing field” whereon state and non-state retailers compete needs to be “level”.

Is an in-state retailer with its merchandize readily available to the touch and feel of the consumer really at a disadvantage to the non-state retailer that charges shipping and handling fees which are often far in excess of any state sales tax? Does that really make sense?

But for the Taxman, justification is inconsequential. Like the song says:

Don’t ask me what I want it for

If you don’t want to pay some more

Gary Wisenbaker (gary@blackstonestrategy.com) is a corporate communications and political consultant at Blackstone, LLC in Valdosta, Ga.