EDITORIAL >> Three cheers for Huckabee
Arkansas is missing some $250 million to $300 million a year in taxes because out-of-state mail-order houses and Internet merchants either will not collect use taxes on their Arkansas sales or else will not remit to the state the taxes they collect. Use taxes are the equivalent of sales taxes, but they are collected on items bought outside the state for consumption inside the state.
The U. S. Supreme Court ruled 38 years ago that the commerce clause of the Constitution bars a state from collecting taxes on sales originating in other states if the businesses do not have a base in that state — unless the federal government says it is OK or unless the merchant voluntarily obliges.
Internet marketing has become so pervasive that it has carved away much of the retail business of local merchants and sharply reduced state and local tax collections.
It has made the sales tax, already unfair to consumers, unfair to merchants as well. It assigns a distinct trade disadvantage to local merchants, who support the state, the schools and their communities through taxes, employment and gifts.
The states have lobbied Washington for a dozen years to rectify the injustice. Sen. Dale Bumpers of Arkansas, while he was a senator, took up their cause, but he was unsuccessful. Congress said it wanted to give the fledgling Internet marketers time to grow. Requiring them to collect and remit taxes like other merchants might discourage growth of Internet businesses.
The Streamlined Sales and Use Tax Agreement gives states and online and catalog merchants a way to collect and remit taxes. Thirteen states are full participants and Arkansas and four other states are partial participants. But Arkansas will begin to collect a few taxes soon if it can work out several kinks in how it will be done. The Arkansas Legislature this year postponed Arkansas’ full participation until 2007, which might still be postponed if the kinks are not worked out or Congress does not by then require sellers to remit taxes to the states.
Norquist, an exponent of President Bush’s four rounds of tax cuts for high incomes and corporations, says he has the legislation scotched if he can keep a Republican majority in just one house of Congress after the midterm elections in 2006. He is confident that he can do that while trying to kill off Medicaid, Social Security, Medicare and other insurance programs for the middle class and the poor.
He was quoted in the Arkansas Democrat Gazette as telling Huckabee that he should withdraw Arkansas from the agreement and refuse to have any taxes collected from merchants outside the state. It is a tax increase, he said, and Huckabee needs to burnish his credentials as a foe of taxes if he hopes to be elected president.
Another Republican presidential wanna-be, Sen. George Allen of Virginia, opposes the agreement.
Huckabee had the perfect riposte. He said he favored a tax structure that was fair and a national government that obliged the 10th Amendment to the Constitution by not usurping the power of the states.
Frankly, we didn’t know he had it in him.
“Mr. Norquist,” the governor said, “doesn’t have to govern and isn’t accountable to anyone but his donors and lobbying clients, so while I don’t fault him for taking a more liberal view of letting Main Street small business collect taxes while letting the big corporations off the hook, I do feel he needs to be more honest about what the streamlined sales tax really does, which is create a simpler and fairer system.”
A Republican who talks back to Grover Norquist? Some days, our incredibly shrinking governor’s presidential preoccupation doesn’t look so preposterous.