The Senate has moved to require that local sales taxes be levied on internet transactions. Is this a good idea?
The answer is “yes”. First, it represents good fiscal policy by broadening the tax base. In California, for example, the state is dependent on personal income taxes for about 70% of its revenue. Personal income taxes are subject to wide cyclical swings. Second, it recognizes the major shifts in technology and consumer tastes to purchasing over the Internet. Third, it levels the playing field and reduces the tax bias currently directed against brick and mortar stores.
Spending constraint remains vital but should not stand in the way of making the tax code more fair and rational.
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