This is misleading: A score of Internet lobbies, such as Netchoice, representing Facebook, Yahoo, and (TechCrunch’s parent company) Aol, argue that the senate’s bill “does nothing to address what the Supreme Court says was an unreasonable burden on interstate commerce,” explains Steve Delbianco of Netchoice.
"Undue burden on interstate commerce" comes from the negative implications of the Commerce Clause, which gives Congress power over interstate commerce and prevents states from putting an undue burden on interstate commerce in an area where Congress has not legislated. If states impose sales tax pursuant to an act of Congress, then there is no Commerce Clause concern since Congress does have the authority to regulate interstate commerce.
Had to look this up. Looks like there was an earlier ruling in 1969 about sales tax on mail orders. The 1992 case seems later further refine the ruling.
Basically in Bellas Hess, the appellant claimed that the tax was unconstitutional on Commerce Clause and Due Process grounds. Specifically, that states imposing a tax on mail orders infringed on Congress's power to regulate interstate commerce and alternative that it violated appellant's rights under the 14th amendment to equal protection under the laws. In Bellas Hess, the Court agreed with appellant without justifying the decision explicitly on due process grounds. In Quill, the Supreme Court clarified that it was deciding on Commerce Clause grounds.
The relevant distinction is that Congress cannot pass legislation to allow the states to violate the 14th amendment. It can, however, pass legislation that allows the states to burden interstate commerce since if Congress has sanctioned it than any such state legislation doesn't infringe on Congress's power.
Amazon has also been collecting NY State sales tax for quite some time now. Does anyone know if Amazon has any physical presence in NY State? I've never received anything from Amazon that has been shipped from NY.
I noticed that items that are sold by Amazon always incur NY tax, but items sold by independent retailers who sell through Amazon's site often don't incur tax.
NY argues that Amazon's relationship with NY-based affiliates constitutes a NY-based Amazon marketing force that produces a sufficient nexus with the state to make them subject to NY law on collecting sales tax. It's currently being litigated [1].
I recall reading [2] that Amazon actually supports the federal legislation though, because they're slowly moving towards having a 50-state presence anyway, as things like grocery delivery and same-day delivery become a bigger part of their strategy.
That was their initial "scorched-earth" strategy, but they quickly dropped it. In recent disputes, e.g. with Texas and New York, they haven't terminated affiliates, and have instead opted for a mixture of negotiations and legal battles.
Amazon also collects sales tax in Pennsylvania, where they have significant distribution facilities. However, it took several years for the tax collection to materialize.
Technically residents of a state are supposed to pay "use tax" if not collected by the seller. Of course almost nobody does this... my hunch is that doing it once would invite perpetual persecution from the state department of revenue.
How is it incorrect? Amazon charges its customers credit cards, and a portion of that charge consists of sales tax which it is obligated to collect on behalf of the state.
The "exception" is because Amazon has business operations in the state of California, they go to great lengths to keep the list of states the collect sales tax in limited.
Playing devil's advocate here. No one pays "use tax" -- the tax you already owe your state for things you purchase online/on the phone etc and do not currently pay sales tax on. This is already an illegal activity that I'd hazard nearly 100% of the US is in on.
If I wanted to come into compliance here, I'd have to save all of my reciepts from every time I shop online, and probably hire an accountant to figure out all the extra tax I owe. This doesn't sound interesting to me, or enforceable by the government. However, online stores collecting this for me could be a value add in some ways.
Let's take a look at the free market though (although I get that issues of tax law cannot be fully free as they start in a non-free place). What if online retailers _offered_ to collect the tax for me, with the note that you owe it either way and they're trusting you to pay it on your own otherwise? I would likely opt-in much more often. Similar to suggested tips increasing tipping in NYC cabs, this might move the needle in the right direction.
I pay use tax. I've also been audited several times. It's easy to say, "oh, everybody ignores x tax, it's completely unenforceable," but if you get audited, yeah, the state can look through your bank and credit card records and get a pretty good idea of what you owe.
Honest question, what sort of process does it look like for you to total everything up? Do you keep running totals or do it at the end of the year? Do you have an accountant? Would you prefer that online stores collected for you?
Usually I'd use a combination of my Mint records (which had convenient totals for each online merchant, of which I really only used 5 or 6 in a typical year) and the Massachusetts safe harbor law (which essentially allowed me to assume that I spent 1% of my AGI on untaxed purchases less than $1000, and pay use tax based on that number). If I bought anything online or out-of-state that cost more than $1000, I'd add that in separately, but that happened rarely enough that it was pretty hard to forget how much I spent on those items.
What we have right now is a situation where some stores collect taxes in some states. As a consumer, I would prefer it if all stores collected taxes for all states, for three reasons. First, I wouldn't have to figure out which stores already collected taxes, so it would save me time. Second, because I like seeing how much I'm going to pay for something, taxes included, at the time of purchase. And third, because I believe that taxes should be levied fairly and consistently, and that would put online stores on the same footing as brick-and-mortar stores, and honest taxpayers on the same footing as people who are inclined to see what they can get away with.
As a startup founder, however, I'm less enthusiastic. The process of filing taxes in all 50 states would be a huge burden. If a national sales-tax clearinghouse existed, it would be a different story, but under the status quo, it's just too much paperwork for a small company to handle.
About time, on many fronts. Sales tax is the most economically beneficial tax (from a long-term viewpoint), encouraging savings, reducing consumption, and is taxpayer controllable. And it captures gray/black market transactions as well. No reason any electronic retail transactions should escape. Modern tech removes any "burden" claims.
That's one reason, in practice, for the popularity I think. When a state proposes raising income tax on the one hand, or sales tax on the other hand, raising sales tax is often easier to accomplish, because the lobbies against it are weaker. (There might also be a psychological aspect in that it's more of a nickel-and-diming: people may not realize what it adds up to in terms of a yearly total, while they do see that for income taxes.)
It is actually because it is nearly guaranteed to be collectible when it is attached to inelastic goods which are needed by everybody. On the other hand, raising things like estate tax and income tax increases the amount of legal tax dodging through trusts, municipal bonds and the like so it's unpredictable and difficult to collect. This dates back to a reversal of Andrew Mellon's prudent and lucrative tax policies by FDR and Morgenthau, who turned to gasoline and alcohol taxes to cover shortfalls caused by their extremely high progressive income tax rates, and since then high earners have gotten in the habit of tax avoidance regardless of current political and fiscal strategies, permanently entrenching the regressive taxes as necessary.
I'm not sure I buy that as a "because". I think it's more likely sales taxes are passed preferentially because income taxes are more often defeated in legislatures due to political opposition, not because of technocratic arguments about collectibility.
It would be interesting to have some numbers on collectibility, though. Both income taxes and sales taxes can be dodged (black-market purchases and out-of-state online purchases are two common ways of dodging sales taxes). There are a number of examples of states raising either one, and it'd be interesting if someone has extracted data on the results.
It's also easier because it's a state issue (national politics always get more coverage) and usually tied to something people can actually see or understand (we're raising the sales tax .25% for 15 years to fund mass transit).
Poor people are disproportionately likely to shop in-store rather than online because they're vastly more likely to be unbanked (i.e. no credit card) and be low-education.
I'd hazard an educated guess that the percentage of income spent by the poor online is tiny. Both because the above factors and also because the majority of spending for those group is going on rent, groceries, vice (cigarettes and alcohol) and transport which aren't commonly bought online in any case.
Not to mention that there's a significant portion of people who really are so poor they aren't online. I understand that the HN community may be sheltered in many ways from a world where people can't afford a computer or Internet access, or a smart phone, but that world exists, and is not as small as we'd like to think. (I grew up in a family where a trailer home with a broken-down Pinto in the yard would have been a step up ... for some family members, very little has changed)
> "because they're vastly more likely to be unbanked"
This is not true in the US, where your debit/bank card is also a VISA/MasterCard fully usable online. Even people with zero credit can easily spend money online. If you have a bank account in the US, there are effectively no barriers to spending the money in it, online.
Walmart and K-Mart are "fixing" this with free payroll check cashing and rechargeable debit cards. One uses MasterCard and the other uses American Express.
This could be remedied with a tax credit on the state income tax return, i.e. you get an automatic tax credit for sales taxes paid in whatever amount is decided to be "fair".
But when he goes to buy doritos and a red bull at 7-11, some of that money is captured. I.e., Lot's of black market dollars wind up being used to make legal taxed sales purchases.
But the legal dollars do to, if you go buy a new garden hose from a local realtor, and the owner goes and buys doritos with his proceeds, you get the taxes off both.
In practice, you could tax one thing everyone elses (like food) and just wait it out, and all money will eventually route itself back through the taxed exchange. The point of such taxes is to take a fraction of all exchanges.
Though, I'd rather they solve the problem of why a black market needs to exist than try finagling a tax solution on it. You have to go back to the drawing board and ask "what is there a demand for we have artificially restricted such that it is forced onto a black market?" and see that tremendous potential tax revenue for what it is.
Well as long as you are trying to tax and monitor transactions, there is always a market for not paying the tax, even if everything is legal to buy or sell.
Maybe not a burden for the Amazons of the world, but for smaller e-comm stores it is most certainly going to be a burden IMO.
I'd suspect that many online retailers would be forced to go down the path of outsourcing most of this using something like Shopify or similar -- it's just a lot of tax rates and calculations to keep track of, not to mention report on and optimize for!
If you were talking about a single national sales tax, you could be right. But what is being discussed is 50 different state taxes, which would be a burden, regardless of modern tech.
It's even worse than that, since there are cities and counties which levy their own sales taxes. If an Internet retailed has to collect all of these, they need a comprehensive sales tax database plus a mechanism for sending payments where they're due.
I see a great opportunity for a webservice startup here.
Though I'm sure there is an opportunity to help small companies since most companies who currently need to manage national sales taxes are large (have a presence in every state).
There are a number of companies doing this kind of data collection/rental, though they're mostly focused on the enterprise market. The data is needed by folks like supermarkets who operate in lots of jurisdictions and need to charge the correct sales tax in each one. In addition to the rates varying by city/county, the taxable items may as well, e.g. in some jurisdictions food isn't taxed, and the definition of "food" varies, too.
Some large retailers already have at least a partial handle on this. My zip code crosses 2 jurisdictions and I'm always asked if I live in jurisdiction A or B. I assume they're doing it for local tax purposes even thought we have only a state sales tax here.
"Sales tax is the most economically beneficial tax..., encouraging savings, reducing consumption, ..."
Encouraging savings and reducing consumption might be good things for society, but it seems that they hurt the economy (less trade, fewer jobs) rather than benefiting it.
Savings would be a good thing, but I don't think the banks care to pretend they want to encourage savings any more ... au contraire. The 5% interest passbook savings rate - which the Depression/lWW2 generation enjoyed - "encouraged" savings ... until it got stripped away after the S&L bailout and was never replaced.
So the "good thing" would have to come from Congress. Good luck with that.
Saving money and reducing consumption hurts the economy in the short term, but in the long term it encourages capital investment, lending, and other behavior that creates sustainable jobs and more trade. Whether or not an increase in sales tax will have those effects on Americans has yet to be seen.
It also only applies to the upper tiers of society. For poorer people, they are going to be able to save less because essentials cost more, and go further into debt if a catastrophe strikes.
This would only penalize the poor, as the rich could afford back yards full of solar panels and wind turbines, and drive Tesla cars... And since the rich are such a small percent, this would have virtually no impact on the environment.
I love the idea, but I do not believe this is a better solution to sales and employment tax.
I think a consumption tax is the best solution. Basic necessities like food, housing, etc.. are not taxed (or are minimally taxed). Luxury items like televisions, cell phones, etc. should be taxed though. This wouldn't penalize the poor, but the government would get the money they're looking for.
Can anyone think of any downsides to this?
EDIT: Yikes, I leave for half an hour and come back to a maelstrom of comments. So, to acknowledge one of your points, it could be difficult to categorize what is or isn't a luxury item. But, c'mon, is a $90,000 car really a necessity? I think it's easy to tell which items definitely aren't necessities.
One solution that a number of people have been working on is called the "Fair Tax." [1]
The general idea (and I'm probably missing some of the significant points, but this is a rough outline) is that there would be no income tax at all — all taxes would be on consumption. Rather than trying to regulate what is taxed and what isn't, everything would be taxed at the same rate.
To fight any regressiveness involved in that, everyone would get a set amount of money every year, which is equal to the consumption tax you'd be paying on the first, say, $30K of purchases a year. So if the consumption tax rate is 25%, you'd be given $7,500 a year. (The term they use is "prebate.") That way, everyone's first $30K of expenses is a wash. After that point, you're only taxed on the money you spend beyond it. The more you buy, the more tax you pay.
A number of Republicans have been in favor of the Fair Tax, and it was one of the planks of Gary Johnson's presidential campaign last year. But it gets support from Democrats as well, and was one of the main components of Mike Gravel's campaign in 2008.
I'm sure others will point out downsides to it, but one that I know of is that current retirees, who have already paid income tax on some of their savings, would have much less purchasing power under the new plan. That is, they'd be double-taxed on the money used to buy goods under a Fair Tax plan. I believe there's also been skepticism from opponents that the numbers actually work out well enough that a Fair Tax system would bring in enough money (as compared with current tax revenues). [Edit: the double-taxation wouldn't be limited to retirees; they're just the group that's often mentioned as being significantly affected.]
(I'm not an apologist for a Fair Tax approach; just wanted to mention it as one theory for introducing a consumption-based tax in the US, in case you're interested / want to learn more.)
One seemingly obvious problem to this (at least the way you describe it, maybe not the way it's actually proposed - I didn't read it) is that this would disincentivize spending, and incentivize saving. So it would seem[1] that this would cause the economy to take a big hit.
I just remember a few years back when the economy was at the worst we've seen in a while, the government seemed to really push spending and investing in stocks over saving. So if there was no penalty for earning money, only spending it, we'd be back in the same boat.
[1] Disclaimer: I'm certainly not an expert in economics.
The US economy is in such dire straights because of consumption, not due to the lack of it. The Keynesian economics fraud of the last few decades (see: Japan, half of Europe, the US), which has been pushed 24/7 at every level of government and media, is massively to blame.
Ask yourself one simple question: how does higher consumer spending help the US economy when all that money flows back to eg China? Right now the US is merely a middleman, with service workers that take a small cut for distribution.
China as you'll have noticed is getting wildly rich, at breakneck speed, without the need to constantly push over consumption (their savings rate is doing just fine).
America needs a lot more savings, capital investment, and production, and a lot less spending. We had this algorithm decades ago, and we were extraordinarily rich accordingly, and were far better off with a lot less consumer spending as a ratio of our economy.
To paraphrase Warren Buffett: you get rich producing things, and you get poor buying things.
China figured out how it works. Their economy more closely resembles the US economy of the early 20th century, in terms of production vs consumption. The arguments being made for China to consume more, are arguments in favor of China handicapping itself to allow others to compete more easily.
The planet money podcast recently talked about this. One of the reasons:
If you're "poor" and you spend 90% of your income on goods, you're getting taxed on 90% of your income.
If you're "rich", you spend 10% of your income on goods and just put the rest in other investments. This means that only 10% of your income gets taxed.
We have this in form of VAT back in the other side of the pond. It's a massive, massive failure because it's impossible to actually keep the items list up to date. For example, a refrigerator and a TV are counted as luxury items because of the date the law was enacted, and it has since not been updated because of the gridlock not unlike D.C.'s.
Land value taxes are among the most evil possible. It's no coincidence land value taxes are so commonly related to extreme Socialism and Communism ideologically.
Modern property taxes are a pretty horrendously vile tax on average people as well and are extremely regressive. The notion that you can work your whole life, pay off your average house, and still owe $2,000 per year in property taxes should be an outrage. $20,000+ over ten years? That destroys all the value return a typical home owner can ever expect to earn on their house. For most people, a house is the largest investment they'll ever make, and property taxes help destroy that. Not to mention the terrible idea that your paid for house can then be stolen because you don't pay the tax.
The idea seems good though. By occupying land you are hoarding scarce resource. Tax should incentivise you to occupy less. I think the tax should be progressive so if you have small house and lot you don't owe state that much but if you have McMansion you should pay handsomely or sell it tho someone who can actually afford it or to someone who splits the lot between multiple buyers.
Some large percentage of land value taxes could be dedicated to improving transport infrastructure around the place where high taxes come to lessen the squash.
Someone else suggested it, and I think it works too - consumption tax on everything (one thing I would add is a scaling tax rate of the per goods cost against the median income, so that a car costing 200k might be taxed 10% higher than a 20k one, and I would call the taxation of large purchases at higher rates a benefit) but a tax credit for everyone equivalent to some metric to measure the amount of money it costs to feed / house / heat / clothe oneself.
Exempting specific categories of purchases quickly becomes a quagmire of complexity. Better to just have an automatic tax credit of whatever amount is determined to offset tax on the typical "basic necessities" purchases of an individual or family.
You'd have to place caps on items. That said, you'd have to deal with complexity in pricing: $500,000 for a house in Houston is probably a luxury, but not so much in markets like San Francisco.
I suppose in an age where we're used to being able to contact anyone from nearly anywhere with a cellphone and it's increasingly hard to find payphones, those might not be a "luxury" per se. And cellphones can be had for relatively cheap. But televisions? Nobody needs a television.
I'm not a luddite and I appreciate the things that technology enables for me, but I appreciate those things even more because I realize I don't need them.
Access to mass communication is a basic necessity in any democracy. People have to be able to inform themselves about current political topics if they are to take informed decisions.
As such all that’s needed to access that information is not a luxury item. I agree that nowadays it’s possible to inform oneself equally well if one can access the internet (and a newspaper subscription was always a possible substitute), but I think it would be wrong to privilege certain forms of access to information, not the least because certain forms of accessing information might be harder or easier to use for certain groups of people. Consequently privileging, say, internet access would potentially exclude certain people from the political process.
Mass media plays a central and important role in the democracy of any larger democracy. Its existence is vital and as many people as possible should have access to it.
I think you make an extremely important point. I largely agree with you, yet I don't think it's entirely cynical of me to think that if your primary source of data for making informed decisions is coming from television, you're (and we're all) still probably better off without it.
Who buys desktops anymore? They can pay sales tax.
Plus, if you really wanted to tax TV's and not computer monitors, they're usually different SKU's and accept different inputs. If it has HDMI, coax, or component inputs, tax it as a TV. VGA, DVI, DisplayPort, Thunderbolt, tax it as a monitor.
About 250 million people per year apparently. And for the next decade desktops are likely to continue to be sold to the tune of 200+ million units per year even when taking into account a sales decline.
The trend has turned very sharply towards laptops over the past 10-15 years. It's a moot point in any case as you can distinguish computer displays from televisions according to input format.
If you can ever get the bureaucrats to keep the inflationary adjustments current. See the alternative minimum tax for the greatest example of that in action.
Looking at the sponsors is interesting. The main sponsor, Mike Enzi, is a conservative Republican, who you might not normally expect to be sponsoring tax bills. But he represents Wyoming, a state that heavily depends on sales taxes, because they've made the decision not to tax personal or corporate income, leaving sales/use taxes as one of the major revenue sources (responsible for ~40% [1] of the state budget).
At this point I wish the Federal Government would pass a straight 5% sales tax for goods crossing state lines. Vendor pays the Fed quarterly with report of zip codes bought from. Fed pays the origin state and the destination state 2% each and keeps 1%. Fed tell states no other taxing of items bought online.
Yes, let's introduce another federal tax. Because we don't pay enough in federal income taxes, duties on imports, state income taxes, state sales taxes, county sales taxes, local sales taxes, and local property taxes. Let's add another tax. I'm sure I missed a few.
I'm normally in the same belief, but the cost of each state getting to tax what is sold online differently will cost more than this. I figure it is a replacement for 50+ taxes with weird rules for one streamlined tax. I'll take that.
Just so you know: Every current rule that could potentially reduce your tax burden is now called a "loophole". For example: Limiting deductions for high earners (but not exactly the same deductions for low earners) is now routinely described by politicians and the media as "closing loopholes".
I'm aware of that. California does not need to tax people more for the exact same reasons.
Competition between brick and mortar stores and Amazon is a smokescreen. Tax deals are given to big box stores all the time, to this day. The whole "protecting small business from online competition" angle is a ruse.
They're not taxing you more. You already need to report and pay any sales tax that you didn't not pay on items purchases over the Internet. The so called Internet tax moratorium was not an actual ban on taxes, instead it did not allow states to force Internet entities to collect sales tax. This removes that barrier.
Interesting that no one ever talked about the alternative to Internet sales tax, to solve the competition problem: removing sales tax, and replacing it with use/income/property/head/etc tax.
Sales Taxes are the least economically destructive of all taxes. If a government's goal to optimize economic growth they should eliminate income, property, capital, etc taxes are replace them with a sales/consumption tax. Bobby Jindal proposed this in Louisiana.
Sales taxes are also regressive: poor people spend a higher percentage of their income than rich people, so any tax on spending will affect poor people more than rich people.
Sales Taxes are vary economically destructive as unlike income tax they artificially shift the economy from real goods to services. The only way to avoid this is to tax all spending and gift giving which ends up being just another income tax.
I'm fine with income taxes so long as they're progressive and have no holes, such as investments in the stock market not being considered "income" so that people can make $800,000+ /yr and pay some obnoxious 15% in taxes while people making under $100,000 can easily pay over 25%. Feels like we're losing out on a few hundred billion/yr in tax revenue due to nonsense like that.
By "nonsense like that," do you mean nonsense like encouraging investment? We live in a capitalist society. Capital is eponymously fundamental to market growth. Discouraging investment by increasing capital gains tax is one of the surest ways to stymie economic growth. To do so for "a few hundred billion in tax revenue" would be unbelievably short sighted.
I'm not a professional economist but it seems to me that consumption is what is fundamental to market growth, and that capital is merely what you must have to scale up to maximize your ability to supply the products and services demanded by the consumers.
You can partition by B2B, B2C, B2G, whatever, but at some point it has to stop being a pyramid scheme, and that point is with the consumer who are generally able and willing to consume more if taxed less.
No, production is fundamental to economic growth. Consumption is a secondary dependency.
Before you can consume anything you have to first produce something (unless you have credit, and that won't last very long unless you have produced something or are going to).
Try consuming before you produce. It's a logical failure that modern economics tries to pretend doesn't exist (and we can see how far that has gotten many economies today).
For obvious examples of production over consumption, see: China, or the US before hyper consumption took over a few decades ago. Savings + capital investment + production = wealth. Lack of savings + spending + lack of production = poverty and debt (aka modern America).
But how does taxing producers more than investors make it easier to get producers?
All that does is mean that the fruits of a producer's labor generates a lot more wealth for other people, at a lower tax rate. That necessarily means we have to seek higher salaries, which requires higher investments, which necessarily means gains will be smaller, resulting in less ROI for investors.
Placing more of the tax burden on the people building value doesn't make much sense, since they have to live, too.
I think when you reference "producers," you really mean laborers. i.e., laborers in a factory produce goods, so you are calling them producers. In reality, laborers are actually a type of capital. They are replaceable and you buy them from a market. That's why you can get away with taxing them higher than investors. The investors provide the monetary capital necessary to buy physical capital (like machinery) and labor "capital." So you need to tax them less, or else the companies they invest in will have less monetary capital to purchase laborers, and therefore demand for laborers will diminish, resulting in job loss.
But there's a circular logic flaw in believing the two aren't related. Producers (not just laborers, think scientists, researchers, editors, engineers, managers, etc, in that they produce services and products) have some cost/value that you might term "capital" (really everything is technically capital in that sense), and investors having more money due to less taxation results in them being able to pay for more producers.
But it doesn't really work that way. Producers are typically the majority of the consumers as well, and that's money that ends up back in companies as capital that ultimately is more valuable than investor capital, since it's renewable and with a profit margin doesn't gain equity and increase in value like investor capital. But in a sense, then consumers are investors, just a different type, but they're being taxed more highly, so they can't afford to consume as much, so they invest less capital in companies.
There's a cost of living, too, that you can't ignore. If producers contribute more of their earnings to taxes and have less to live on, then the margins are smaller and they necessarily need to seek higher income to offset the taxation -- which results in their production capital becoming more expensive, which makes investor capital less potent as well.
I don't see a good argument at all for taxing people who work for their money, because all of those argument circularly apply to the working people as well, and logic would dictate that it impacts the value of capital and ultimately leads to fewer jobs. Lower producer taxation and higher taxation on investor gains may reduce the available capital (but not necessarily the amount invested) but it also reduces the cost of other forms of capital, while increasing the amount available for investment from producers. That means a much larger class of people have more room to live well and spend, versus a few living well and spending. To put it really simply: higher income taxes and lower investment return taxes results in financial segregation while the opposite tends to destroy it. It's clear, given that basic fact, why some argue for or against it. It also changes the types of investments companies need to seek, which may or may not be a bad thing.
I would argue in favor of lower taxation on producers (lower taxation on everything, with a Federal government at least 1/4 smaller by focusing strictly on key priorities). I'd argue for a government matching the Bill Clinton era size, adjusted appropriately for 13 years, and the taxes to go with it.
My point was emphasis on production is extremely lacking in the US today. Presidents pay lip service to it (and absolutely nothing else), meanwhile China is beating our pants off by actually focusing on it. My other point was, production is more important than consumption (because the one must come before the other, not to say you don't need consumption of course).
You turn on the TV and every talking head says the same thing: consumption is 2/3 of the economy. So in their world we need more consumer spending - more people buying junk they don't need from China so China can get richer while we get poorer. When you put that into a logical context, it's comically absurd. Where do those talking heads think the money to consume comes from? 100% of it comes from production or credit, with the ability to spend being a left-over fractional fruit of production (aka the profit from producing something).
These are pretty bold claims given that the last cuts to capital gains offered little to no economic growth and hurt government revenues as well as contributing to the recent rise in income inequality in the US. Have a look at the published research on the topic.
The Fed's massive inflation is far more responsible for the rise in inequality in the US than anything else (and far more than a change in capital gains taxes). Including their constantly exploding bubbles that hammer the bottom 75% far more than the rich in standard of living terms.
The cost of a house has doubled in 15 years (and housing is currently spiking again while real unemployment is 14%, thanks to the Fed's massive housing inflation). The cost of gasoline has gone up 3 to 4 fold in the same time frame. The cost of groceries have followed a huge inflationary curve over the last 15 / 30 / 50 years. Ditto the cost of a vehicle.
Rich people can shield their money from inflation (easily in fact), average or poor people cannot shield their incomes from inflation. That simple fact is responsible for a huge destruction in standard of living in the US. Incomes have not even remotely kept up with inflation.
There are many problems with the theory you espouse here but I will pick on just one thing. The idea that over the last X number of years you can reasonably compare one item to another for many things. A car or a house in the 1950's does not remotely compare to one today, the technology and the safety elements in a 1950's "box with wheels" compared to what you get with a modern car?
Incomes are stagnant or declining in real terms we can agree on that. While low interest rates and easy credit are an element of that, why blame it on the "Fed" when easy money is happening the world over? After all, it is easy for average or poor people to shield their income for inflation, it is called getting a raise. Problems arise when the economy and tax system values capital over work - which was my original point.
For state legislatures, charging sales tax to buyers outside the state (like most internet buyers probably are) is much less politically risky than raising income or property taxes on state residents, since people outside the state can't vote them out of office. And raising income or property tax on someone who doesn't buy a lot of goods may end up being a net tax increase for that person, which might also incur their political wrath.
"Undue burden on interstate commerce" comes from the negative implications of the Commerce Clause, which gives Congress power over interstate commerce and prevents states from putting an undue burden on interstate commerce in an area where Congress has not legislated. If states impose sales tax pursuant to an act of Congress, then there is no Commerce Clause concern since Congress does have the authority to regulate interstate commerce.