This is an archived article that was published on sltrib.com in 2016, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
Utah is at the center of a national debate over the fight to raise taxes and impose greater regulations on Internet commerce.
Between U.S. House Oversight Committee Chairman Jason Chaffetz's Online Transactions Parity Act and state Sens. Curt Bramble's and Wayne Harper's state efforts, a select few Beehive State lawmakers have staked their political careers on making small businesses tax collectors for the government. Fortunately for taxpayers and consumers alike, there are good reasons that for more than 15 years, these efforts have failed.
Big government politicians have long sought to raise and impose taxes on consumers who can't vote them out of office. The growth of online retail shopping in recent years has made that quest appear even more tempting. Several things stand in the way. The first is the U.S. Constitution. In Quill Corp. v. North Dakota, the Supreme Court held that a business had to be physically present in a state before the state could require the business to impose sales or use taxes on consumers elsewhere on its behalf. This has prevented states like Utah from taxing businesses and consumers that aren't based in the state. It has also prevented states like California from reaching into the pockets of Utah consumers. The Constitutional barrier to the imposition of new and higher taxes has been an annoyance to some lawmakers, it has not stopped them from trying.
There are over 10,000 sales and use taxing jurisdictions in the United States. State and national efforts that would subject small businesses to each of these unique tax collection entities would be both burdensome and unaffordable. Imagine New York or California tax collectors auditing small online retailers in Utah for what they believe are under-reported tax payments. While this would be a boon to accountants and lawyers, it would be destructive to the small businesses that make America the economic powerhouse it is.
The effort to raise taxes on Internet sales isn't just bad policy; it's horrible politics.
A poll released just last week found that 71 percent of Utahns oppose legislation that would require businesses to collect and file sales taxes in other states. Seventy-three percent of people in that same poll believed that other states would be encouraged to subject small businesses in Utah to follow suit. And the two-thirds of Utah residents who oppose letting other state tax collectors reach into their pockets have good reason to be concerned. Bramble serves as the president of the National Council of State Legislatures (NCSL), a liberal big government lobby group, that pushes for state and federal legislation that would allow other states to do just that.
But what if Bramble and Harper's legislation were "revenue neutral," as some hope? Even if the state sales tax were reduced to compensate for new revenue generated by expanding the Utah sales tax beyond state borders, the legislation would not merit support. State borders provide important protections for consumers and taxpayers from overzealous tax collectors. Tearing down this wall, whether it be through greater e-commerce reporting and notification requirements or greater tax authority, would destroy perhaps the most fundamental of protections against taxation without representation. Americans have a right to vote for or against those who raise their taxes.
Imagine being audited by California tax collectors, hauled off to a New York Court, or penalized with a lien by Illinois. If Bramble's efforts succeed nationally, this is precisely what could happen. The Utah Legislature should follow in Sens. Mike Lee and Orrin Hatch's footsteps by rejecting efforts to expand state taxing authority beyond state borders.
Grover Norquist is president of Americans for Tax Reform.