Monthly Archives: March 2013

Internet Tax

“The word bipartisan means some larger-than-usual deception is being carried out” – George Carlin.

 

The above quote may be from a comedian but the sentiment is no laughing matter. Late last week the US Senate held a vote on a budget resolution and decided they would sneak in a wholly unrelated bill, the euphemistically named “Marketplace Fairness Act”. Sadly there was strong bipartisan support for this embedded bill (75 for 25 against). The putative goal of this legislation is to put brick and mortar stores on an equal footing with online retailers with respect to sales tax collection. Presently, if you purchase goods online from a seller that has no “nexus” (that is, no physical presence) in your state then YOU, not the reseller, are responsible for submitting the appropriate sales tax to your state. As I’m sure you’re aware this is hardly ever enforced (as it would be political suicide).

The politically expedient route then is to go after out of state retailers who have no voice or vote and shake them down for tax money. So apparently if Party A is harmed and Party B is not, it makes more sense to start harming Party B rather to stop harming Party A. Brilliant.

My goal is not pick through everything wrong with this bill (and there is a lot) but rather to suggest a simple and viable alternative. Instead of forcing retailers to keep track of a myriad of different taxing authorities and a multitude of filing deadlines and burdensome paperwork (the claim that this bill simplifies filing is a ruse), why not simply impose the sales tax on the source of the sale rather than the destination? This is how our current sales tax system operates. Brick and mortar retailers do not vary the tax they charge based on their customer’s zip code. There is no functional difference between a buyer driving out of state, buying a good, then driving back home versus that same buyer buying that same good on-line and paying a shipper to retrieve said good.

Internet based retailers should therefore collect sales taxes just as though the customer walked into their premises and made the purchase. Then they only have one tax rate and one taxing authority to deal with and their locality benefits from those sales just as they would from a local sale. This approach entirely undercuts the arguments of brick and mortar stores. 1) Most of the country has sales taxes so anything bought on line will not be “tax free” but will bear the cost of the local sales tax of the seller and 2) for every sale “lost” to a remote seller the local retailer can also “steal” sales by selling their wares on line (this is already taking place: Amazon and Ebay have become a virtual shopping mall of brick and mortar stores selling on line).

The only plausible objection to this plan would be that online retailers would move their operations into low or no sales tax regions of the country or that high tax region retailers would be at a disadvantage relative to low tax regions. Tough. If that is the case then either (a) those businesses can leave or (b) they can bring political pressure to bear on their LOCAL politicians to lower their rates. The tax competition arising from this system will tend to equalize tax rates across the country as they are shifted downward toward the absolutely minimum sustainable level (just as competition pushes prices down in any market). Source based taxing exposes the tax policies of each region to the worldwide “wallet voting” of potential customers. However destination based taxing limits interregional competition and removes the possibility of locals benefiting from lowered taxes due to outside tax competition. Government doesn’t like competition, so it is little wonder the destination based system is favored by the political class.

At the end of the day it’s a gamble: you can go with the destination taxing and gain taxes on internet sales to locals while losing out on taxes on internet sales to non-locals or go with source taxing and have the reverse. The former is an untested, complicated and burdensome system, the latter far simpler and requires no procedural changes from our current method of sales tax collection. Of course the simplest way to “level the playing field” would be to simply eliminate all sales taxes. But that is an altogether different discussion.

Theft by any other name

“The state is a gang of thieves writ large.” Murray Rothbard

It is curious that this simple fact is not more widely accepted, however given that the state itself has mastered the magician’s art of misdirection (via state apologists given a platform in the public media coupled with the indoctrination of our children into venerating the state) it should perhaps not be all that surprising. We remain as blissfully unaware of our cage as fish are to the invisible boundaries of their aquarium. But sometimes cracks develop in those transparent walls revealing the deceit that has been there all along. A case in point is the recent EU-IMF bailout of Cyprus’ troubled banks this weekend. For those whose eyes glaze over at the prospect of a discussion of Eurozone financial policy I will spare you the gory details. In fact, skipping the details and looking at the big picture makes the crime occurring all the more clear. The bottom line is that the Cypriot government is confiscating between 6.5% – 10% of all money on deposit in Cypriot banks (more precisely they are being forced to buy an equivalent amount of bank stock). The short narrative is this: Cypriot banks gambled away depositors’ money on bad financial bets, then turned to the government to bail them out, who on their behalf went before the EU & IMF with hat in hand begging for a loan lest all their banks go bankrupt. The IMF agreed to a loan based bailout only upon condition the Cypriot government could prove it had the tyrannical cojones to take what it wanted from the people thus assuring the IMF of the loan’s solvency (insofar as the solvency rests on the ability of the government to confiscate and repay). This is simply gang initiation at the state level. It is crony capitalism at its worst and most blatant.

However it is as Barack Obama would say “a teachable moment.” What the Cypriot government has done is no different than what our government did with the TARP and other bailouts of our banks in 2008-9. The only difference is form, the result is identical, namely theft of the citizen’s money in order to benefit the banking elite. The countries that use the Euro cannot simply print up more to their heart’s content as we can with the US dollar. Therefore the only way to obtain needed euros is to a) borrow them or b) take them. The US government has a third funding source, which is c) inflate them (which is just a variant of (b)). Of course no government is honest enough to say “we’re taking your money” – no, this is a “one time tax.” So while the Cypriot government will simply take what it wants from depositors through the front door, our government comes in through the backdoor and through the inflation tax chips away at the value of the money on deposit. Naturally the whole scheme was justified on “greater good” grounds in that had they not gotten the bailout then the whole banking system might have collapsed and all depositors might have lost their money. Yes, the whole “you might benefit if we help these other people, therefore you must provide us with the means to help them” argument (put forth by every persuasion of statist, from the so-called conservative that supports publicly funded schooling to the super progressive advocating socialized medicine) is forever the justification for any and all types of state sponsored intrusion into the lives of individuals.

So for anyone taking solace in the notion that such bank account confiscation could never happen here please realize that it already has in the form of inflation sponsored bailouts. As long as we maintain a system of fractional reserve lending, legal tender laws, a central bank (Federal Reserve) and government “monetary policy” we will never rid ourselves of the gang of thieves bailing out their big banking friends with our money.

Nullification

Following up on my post last week on jury nullification I would like to now delve into State Nullification.

Jury nullification is a right of the sovereign individual to exert their authority over that entity (government) whom they have created and granted limited authority to act on their behalf. Likewise, the states (acting on behalf of the sovereign individuals) created a federal government and granted to it some rights originally reserved by the states. ALL rights not specifically granted to it were reserved to the states or the people (10th Amendment). That means simply state nullification is a state right precisely because it is NOT mentioned in the constitution – anything not listed nor prohibited is by default a state right, not a federal right.

The mainstream media and the political elites condescendingly portray state nullification as some backwards invention of ignorant racists. Nothing could be further from the truth. They only betray their own ignorance of the historical, ethical, and philosophical validity of state nullification. Here are some of the common objections to state nullification:

1)    “Didn’t the Civil War settle this?” If by “settle” you are suggesting murderous violence is a legitimate method of dispute resolution, then no. All the Civil War “settled” is the notion of an “indivisible” forced union – literally the state equivalent of “until death do us part” (as in “I’ll kill you if you leave”). If you are suggesting that because the north won that makes any northern practice legitimate and any southern practice illegitimate, then given the fact that the northern states used nullification to nullify the Fugitive Slave Laws that would I suppose only legitimize the practice of nullification.

2)    “Ok, maybe nullification was used against slavery but it was also used to oppose civil rights laws, right?” True, but that is not so much an indictment of nullification as it is an indictment of democracy itself. Over the course of history democracies big and small have promoted laws inimical to civil rights. The “justness” of laws in a democracy do not scale with territorial area. If the bigger democracy is always justified in forcing its laws onto its smaller member states then one must conclude it would be wholly legitimate for a racist federal government to impose racist laws on non-racist member states. Democracy is the problem, not nullification.

3)    “Doesn’t the Supremacy Clause (of the US Constitution) trump any notions of state nullification?” No, and in order to understand why one must read the WHOLE clause and not merely cherry-pick the parts they like. It states: “This Constitution, and the Laws of the United States which shall be made in pursuance thereof… shall be the supreme law of the land…” The “made in pursuance thereof” is the operative phrase relative to nullification. Nullification is simply the right of a state to say such and such law has NOT been made in pursuance thereof THEREFORE it is illegitimate.

4)    “Yes, but isn’t it up to the Supreme Court to decide if laws are constitutional?” It may do so through what could be called horizontal nullification (i.e. the checks and balance system that exists between the three branches). However only the sovereign people, acting through their proxy the states, have the final vertical nullification authority over all three branches. To suggest the federal government should be the sole and final arbiter of its own powers is an open invitation to abuse. The fact that the federal government has discovered so many new powers for itself only underscores the legitimacy of these concerns.

If you would like to learn more about state nullification please visit Liberty Classroom/nullification, or purchase “Nullification” by New York Times best-selling author and historian Tom Woods. And if you are tired of being spoon-fed an incomplete version of history by the state run public school system and main stream media and would like to learn the truth for yourself please visit Tom Wood’s www.learnrealhistory.com.

The Debate that Never Happened

I was recently involved in the “Debate that Never Happened” at UGA through the Phi Kappa literary society where the question “Is full employment possible under capitalism?” was the topic. Unfortunately the audio is a bit low… if you turn it all the way up and sit in a quiet room I think you can just about make out what I’m saying. I guess if I get to do something like this again I’ll be sure to shout into the microphone 😉

The Debate That Never Happened from Phi Kappa Literary Society on Vimeo.

1 – 1 = 0

Parental responsibilities and authority have well understood boundaries even though no formal written contract exists between parent and child. It is wholly non-controversial that any parent exceeding such boundaries should have their authority curtailed if not entirely rescinded. It is then a rather curious circumstance that when government, whose duties and authorities are clearly articulated in written forms (constitutions, charters, etc.), exceeds its legitimate authority it is considered nearly an act of treason to merely point out that its actions fall outside the scope of its authority.

Representative democracy (e.g. a republican form of government) is relatively insensitive to the will of the people insofar as the representatives are not obligated to act in every circumstance as would the people. This can be beneficial in tempering a mob mentality toward governance (tyranny of the majority), however that benefit can easily become a liability when rent-seeking special interests co-opt and corrupt the system (tyranny of the minority).

There does at least remain one avenue by which the people can expediently and directly make their voice heard: jury nullification. It is the final arrow in the people’s quiver against a tyrannical government. Georgia House Bill 25 (“Fully Informed Jury Action of 2013”) has recently been introduced into the Georgia state legislature. It would protect the right of the defense in a trial to build a case on the grounds of illegitimacy of the law in question. Jury nullification is already a de facto right of juries (in that jurors are not required to disclose their reasoning thus one is always free to rule based on their conscience). However judges (and prosecutors) typically prefer that jurors remain ignorant of this right as they feel the interpretation and application of “law” is their sole domain and that jurors’ only responsibility is to answer questions of fact (“did he do it or not?”). Judges will often outright prohibit any mentioning of nullification lest a mistrial be declared. House Bill 25 would end such prohibitions. This is a uniquely powerful check on government power insofar as juries are composed of one’s peers, not distant bureaucrats or politicians. If the citizens who voted in the politicians do not agree with what they are doing they have the right nullify what they are doing now as there is no guarantee that future voting will undo the harm that has been wrought. Just as jury nullification (and state nullification) was used to ignore unjust and illegitimate laws like the Fugitive Slave Law of the 1850s, it may also be used today to ignore similarly illegitimate laws related to drugs, unpasteurized milk sales, and similar victimless “crimes”.

Government is established when sovereign individuals convey certain rights to their local state government (while retaining all non-conveyed rights to themselves). Likewise the federal government was established when the states granted the federal government certain “powers” (see 10th Amendment to the US Constitution) while retaining all others not specifically conveyed. So, just as the individual can nullify certain state laws based on a breach of authority so too can the states nullify federal laws on a breach of constitutional authority. To argue that jury or state nullification is invalid is to argue that it is better that some be made the victims of immoral and unjust laws rather than sacrifice the appearance of unity of the polity.

I shall address next week several of the common objections to nullification. Stay tuned…