Internet sales-tax vote will be revealing

Alabama’s U.S. House representatives may soon cast votes that reveal much about their political philosophies.

At issue is the Market Fairness Act, which passed the Senate with support from U.S. Sens. Jeff Sessions, R-Mobile, and Richard Shelby, R-Tuscaloosa, on Monday. The bill requires most online retailers to withhold any sales taxes based on the residence of the purchaser. In Alabama and most other states, the purchaser is required to pay the taxes. Almost nobody does.

Gov. Robert Bentley, a vocal critic of tax increases and big government, is all for it. Indeed, he shepherded through a state law last year anticipating congressional passage. The state law funnels 75 percent of online sales taxes — most of which would otherwise support public schools — to the General Fund. The governor predicted the Market Fairness Act would generate $200 million a year for the state.

Arguments for smaller government — popular in the abstract — tend to meet political resistance when it comes to specifics. Both on the state and federal level, people generally appreciate the services their tax-funded governments provide.

Those who want small, weak governments — either for reasons of ideology or profit — had to amend their sales pitch. Cutting popular services didn’t sell, but fiscal responsibility and low taxes did. The movement gained political power in the 2010 elections, although its proponents have remained consistently vague about what services they will cut.

One they occasionally do mention is regulatory enforcement. As the tragic explosion of a Texas fertilizer plant made clear last month, the increased profits from deregulation comes at a public cost.

The Market Fairness Act is not about raising taxes. It merely creates a mechanism by which state and local governments can collect taxes that are legally owed. For revenue-starved states like Alabama, it is a boon to fiscal responsibility.

The bill forces lawmakers to show their hands. If their calls for fiscal responsibility are just a charade for minimalist government, they will vote against the Market Fairness Act. For them, government is the beast and depriving it of revenue starves it. And just maybe, they will at some point be forced to tell which government services they will cut. When they do, voters will have the facts necessary to determine who the cuts benefit and who they harm.

The vote of representatives from Alabama also will be revealing in another respect. As demonstrated last year when the state Legislature had to borrow money from a trust fund to continue even minimal services — a move that came after one-time windfalls bailed them out of several previous budget crises — Alabama cannot manage on existing tax revenue.

If Bentley’s $200 million estimate is accurate, the Market Fairness Act would at least delay the painful political moment when state legislators finally embark on tax reform.

The state Legislature has every reason to welcome passage of the Market Fairness Act, as do all Alabamians who depend on such services as Medicaid, good roads and a functioning court system. To vote for it, though, Alabama’s representatives to Congress would have to buck such conservative stalwarts as corporate champion Grover Norquist, Senate Minority Leader Mitch McConnell and the Heritage Foundation.

The House of Representatives vote will be consequential and revealing.

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2 Comments

Filed under Alabama politics, Conservatism, Tax reform

2 responses to “Internet sales-tax vote will be revealing

  1. hughmorg

    Just as it likes the Common Core education standards, the Business Council of Alabama must be all for this leveling of the retail flaying field. Please, Eric, tell us how our representatives vote on this, each and every one, both at Mile 304 and in the DDaily. Thanks for reporting that Sens. Shelby and Sessions supported this.

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