Taxing Times Saturday Political Soap Box 62

The Internet is a grand and glorious thing.

You can order stuff from around the globe instantly.  And for much of it, the tax rate is zero.  We party and celebrate as if we had gotten away with something.  Those who sell on the Internet swarm Capitol Hill as a plague of lobbying locusts.

Meanwhile, the tax base at all levels suffer.  Your local school gets less funding.  It is harder to build and repair roads and bridges.  State parks and libraries hurt.  Aid to those who most need it is usually the first thing politicians throw on the bonfire of austerity.

You either make this up by sacrificing local and state services, or you experience increases in other taxes.  Property tax rates go up. Income tax rates may accelerate.  There may be an increase in fees or in the sales tax rate rate for the things you buy from box store retailers.

Although our number one priority should be getting people back to work, we do need to look at the long term match of spending and revenue.  I don't view it has cuts or over-burdensome taxation, but as changes that make sense and match the times.  The economy and how we operate within it changes with technology and shifting cultural emphases, and so should our tax system.

The first change is to recognize our changing purchasing pattern.  We should tax Internet sales, both to raise more revenues and to level the playing field.  The local retailer shouldn't have to be charging more and collecting sales tax, while a mega-corp dot com can get away with virtually paying nothing.

I propose a basic three tier rate, with splits going to the federal, state, and local governments. Although the rate may not match exactly the local in-store rate, it should be fairly close.  And it should be based where the consumer lives.  A rate might be as simple as 6%, with 2% each going to the three governmental units mentioned above.

Another idea, which I will just mention briefly, is a financial transaction fee.  Any movement of money could have a small percentage fee attached to it.  Buying stock might result in a 1% fee, and selling it might result in the same 1% fee.  This would be best if it were to be structured as a broader reform that eliminated capital gains taxes.

 The point is, we need to adapt the tax system to the way money really does flow through the economy.  Right now, the burden of taxation is increasingly on wage earners.  We can't keep doing that.  And we can't just making it about trying to target the rich (not that they don't need to pay more).

Just some ideas for these taxing times this early Saturday morning.  I await your responses!