For many months now, “limited government, free market, reduced spending, Conservative Republicans™” Lamar Alexander, Bob Corker and Bill Haslam have been lobbying for and/or sponsoring the Marketplace Fairness Act, also known by a more appropriate title: the Internet Sales Tax. The tax-raising Republicans have been touting this as the states collecting taxes “that were already theirs”, or “making it fair for the brick-and-mortar businesses located in the state”, or “restoring state sovereignty” as if this is some sort of 10th Amendment takeback from the federal government – when in reality it is just a tax increase. Their appeal to the currently popular anti-federal sentiment in the country is not only unconvincing, it is without constitutional merit. Note that they are counting you as fools to fall for this “states’ rights” language.
If these leaders truly believed in “marketplace fairness” for brick-and-mortar stores, then Tennessee would not have cut the sweetheart deal with online retailer and corporate welfare queen Amazon to locate here and not collect any sales taxes – even for sales within the state. How’s that for an unfair advantage? Nobody argues that a sale made within the state isn’t subject to state sales taxes – except for our state government and Amazon, who enjoys an unfair advantage over all the other brick-and-mortar retailers in Tennessee thanks to Governor Haslam who now claims to be interested in “marketplace fairness”. Amazon also received a 10-year, 50% tax break on property taxes to locate in Loudon County. Apparently tax revenue (or is that “fairness”?) is for sale to the highest bidder. We don’t need a new federal law to correct that.
Article 1, Section 9 of the U.S. Constitution states in part:
“No tax or duty shall be laid on articles exported from any state.”
The federal government cannot issue a federal tax on interstate sales. They are exports, whether to another state or another country. The federal government can however regulate interstate “commerce” or transportation of the goods between states. The states themselves do not have this power over one another. They cannot regulate interstate trade period – which is precisely why sales taxes for purchases you made in another state have not been collected. They are exports to your resident state. So the money-grubbers in the state created the “use” tax to take some of your money anyway – despite the fact that they provide zero services to the brick-and-mortar store in the other state you imported from and your “use” of the item you purchased doesn’t induce any burden on your neighbors that require additional tax revenue that isn’t covered somewhere else by another tax.
So why ask permission from the federal government? Because they have to. Article 1, Section 10 of the U.S. Constitution states in part:
“No state shall, without the consent of the Congress, lay any imposts or duties on imports or exports, except what may be absolutely necessary for executing its inspection laws: and the net produce of all duties and imposts, laid by any state on imports or exports, shall be for the use of the treasury of the United States; and all such laws shall be subject to the revision and control of the Congress.”
So guess what? The states are only entitled to collecting their new Internet Sales Tax and subtracting their expenses for executing inspections of these imports/exports. The rest of the revenue is required by the U.S. Constitution to go to the U.S. Treasury. At best, Tennessee could add more cigarette gestapo agents to the state Department of Revenue. The net revenue proceeds to the states legally should be ZERO, because see, the founders really did believe in some semblance of free trade and INDEPENDENT states.
There is no “state right” to this money. There never was.