Jeff Ward: The Internet, Sales Tax and an Off-the-Mark Tribune Editorial

Am I the only one with a keen perception of the obvious?

I’ve gotta stop reading that Chicago Tribune op-ed page because it’s making me crazy. There was a time when, of the five newspapers arriving daily on my driveway, the Trib would be the first freed from its overstretched plastic prison. Now the Sun-Times is No. 1.

And here’s one of the reasons for that top-five shift.

In a Nov. 18 editorial, the Tribune tackled the touchy topic of Internet sales tax by coming out in support of U.S. Sen. Dick Durbin’s “Marketplace Fairness Act,” which mandates attaching sales tax to every Internet purchase. Considering individual states’ prior boondoggle-ish attempts to collect that tariff, the editorial did manage to get one thing right. Durbin’s streamlined bill is head and shoulders above anything previously proposed.

But you have to remember, when you’re talking about the taxation process, that’s like bragging about being the tallest "little person" at the circus.

While I may agree with that editorial writer’s base assertion, the logic he or she employed to get there is as mind boggling and convoluted as getting through O’Hare Airport security the day before Thanksgiving.

The Trib’s initial leap of illogic was to buy into something I call the “”—something a newspaper should never do. Readers of this column are already aware of this insidious government malady where the symptoms start with a tax-revenue entitlement mentality.

Simply flip to any city council meeting on your cable access channel, and if you hear ward representatives or administrators make statements like, “We’re losing stales tax to the Internet,” then you know they’ve been infected. How can you “lose” something to which you never were entitled in the first place?

The universe has managed to chug along just fine without any kind of sales tax for 13.7 billion years so, unlike what so many politicians want to believe, collecting it ain’t some sort of divine right. And once they start thinking along those lines, trust me, it’s only the beginning.

Just look at the all the 100-percent-fee-and-penalty increases the Chicago City Council has recently come up with.

What the Tribune missed is that average 8 percent municipal charge on top of every retail purchase is the worst kind of regressive tax. And by regressive, I mean it takes the biggest budgetary bite out of poor folks who can least afford it. That’s why, some years back, in a rare case of lucidity and compassion, the state of Illinois rolled its portion of the grocery sales tax back to 1 percent.

But in their sad act of trumpeting Net-vs.-brick-store “fairness," they actually end up advocating the least-fair form of taxation. Rather than devise a new means to collect that retail toll, perhaps this would be a good time to consider a simpler and more equitable means of supporting bloated municipal and state government.

Even worse, in this attempt to bludgeon us over the head with the word “fairness,” the editorial insists on promoting the absurd notion that, by not having to charge sales tax, online retailers have it all over their brick-and-mortar brothers.

As Sherman Potter would’ve said, “Pony pucks!”

I’ve said it and I’ll say it again! “Instant gratification. Instant gratification. Instant gratification.” Try telling my seventh-grade son that the current item he just can’t live without will arrive in about a week. You haven’t heard that much whining since Bears fans discovered Jay Cutler broke his thumb.

If I recall correctly, don’t these Internet concerns charge for shipping, which typically comes out to more than any sales tax would? Sure, Amazon offers super-saver shipping, but the last time I employed that methodology it took my deluxe vinyl box set of U2’s Achtung Baby two long weeks to arrive.

And you haven’t heard that much whining since REM broke up.

When Amazon CEO Jeff Bezos told Stephen Colbert that customers could get free two-day shipping by joining Amazon Prime, Colbert asked what it cost to sign up. When Bezos replied, “$80,” Colbert quipped, “Well, then it isn’t free, is it?”

The bottom line is neither side has a clear advantage over the other.

But what really drove me nuts was the writer’s obsessive and incessant references to . The Trib's too-obvious premise was, had Amazon been forced to collect sales tax, Internet shoppers would’ve flung their keyboards out second-story windows and flocked through the defunct bookseller’s doors.

As Jeff Ward would say, bull … on second thought, we probably shouldn’t go there.

The Trib did make one far-too-brief mention of Borders' “strategic blunders,” but that was sandwiched between four separate allusions to the company’s collapse at the despicable hand of sales-tax inequity.

C’mon! We all know the truth. And the truth is, had Durbin’s bill passed 10 years before, Borders still would’ve fallen prey to the same entitlement mentality that makes folks like Sen. Durbin believe in his God-given right to reap sales tax revenue.

And speaking of the good senator, why am I not surprised this Internet sales-tax initiative comes at the hands of a senator from the utterly bankrupt state of Illinois? God forbid anyone in Springfield would even utter the words “budget cut.”

Yikes! Please tell me the Tribune editorial board they can do better than this. Ah well! At least you have me to straighten this things out.

dave November 25, 2011 at 02:47 PM
One can not "lose" taxes or for that matter anything one never had. Now, if they said missed opportunity to find another means to tax that would be a proper statement but then one must argue the legitmacy. Redidents of Cook county likely know that if they buy a car outside Cook and presenting their licence to the dealer find the tax added in spite of local. Much the same, to my thinking, of being charged a Cook county hotel tax for staying at any hotel in, well anywhere but Cook county. The logic: if sales taxes apply to sales, then internet sales should be taxed. Retailers without internet based sales might find this leveling the field. But citiznes might not. Question: how many of these citizens agree with increasing income taxes on the rich; or, for that matter think the myriad of taxes to provide services are great should not see any tax as inheriently bad, or as long as it doesn't affect them it's alright. That any government agency in Illinois needs revenue is more the result of the corruption and mismanagement as making promises that are underfunded. They will always exists as the need for increasing revenues. Clean up the state or live with the taxes.
Jeff Ward November 25, 2011 at 02:56 PM
Dave, If I ever heard one of 'em say "missed opportunity" I probably faint. But there's little danger of that because they don't often think in those "faithful stewards of our tax dollars" terms. Jeff
Mike Garrity November 25, 2011 at 03:01 PM
There's a major disclosure missing here: Ward sells products via the internet. Sort of slants his "perspective," wouldn't you say?
Jeff Ward November 25, 2011 at 03:13 PM
Durbin's bill excludes all business with less than $500,000 in Internet gross revenues. Thus, it only applies to the biggest companies and most certainly not mine!
dave November 25, 2011 at 04:45 PM
As with most taxes and entitlements once something gets passed the gates are open for all sorts of adders. Hald a million "protected" will soon be seen as another opportunity missed. What would change this mentality; as the federal government supplies, show every resident of Chicago/Cook/Illinois their personal share of the debt. at the federal level for each tax payer it is ~$135,000. Is it any wonder many knowing they can't foot their share willingly expect others to cover the tab? The days of personal responsibilty are waning, especially as more are lead to believe the government can solve all, provide all. It maintains itself as we are lead to believe all who have wealth never really earned it but took it. Interesting that with the current Wall Street protests few are lining the streets in Hollywood protesting exhorbidant salaries. Interesting as well when the salaries are paid and the movies are dogs. losing money. Seems the same mentailty as paying large bonuses to, lets say the fine folk at Fannie May. But then more read Pople than Forbes or Fortune.
Kent Frederick November 25, 2011 at 04:55 PM
Jeff, Look at it this way. Thirty years ago, I bought all of my books from Border's, Barnes & Noble, Crown Books, and Kroch's & Bentano's. I used to browse in bookstores all of the time. I haven't set foot in a chain bookstore (other than kill time at an airport) in probably 5 years. Just about all of my book purchases are via Amazon. Here's the thing. I've never been the type to start reading a book as soon as it's in my hands. Whether it's from a bookstore or Amazon, I generally don't start reading for a week or two. So, despite the change in buying habits, from bookstore to Amazon, my reading habits haven't changed. But the amount of sales tax I pay on books has declined, a lot. I used to buy Arrow dress shirts at places like Field's and Carson's. Now, Arrow shirts are hard to find and aren't the same quality that they were a decade ago. So I buy shirts from an on-line men's shop. Again, the amount of sales tax I pay on dress shirts has gone to zero. And unlike Field's and Carson's, I do pay for shipping and have to wait 5 to 10 days for my shirts to arrive. Back when bookeeping was done by hand, trying to file tax reports for all 50 states would be a nightmare. But in the age of the computer and the internet, I'm sure someone has a program for that.
Jeff Ward November 25, 2011 at 06:43 PM
Kent, I think you're an anomaly in that you're not prone to that instant gratification grip. Though I'm never in a rush to get the latest thing, I still prefer bookstores, record stores and clothing stores - until they start trying to up sell me. And you're semi-right, collecting sales tax wouldn't be too bad unless you had to do it by municipality which some states initially suggested. Imagine writing all those checks! I say semi-right because I'm wondering if you've seen a State of Illinois sales tax remittance form? You can't just plug in the final number and, though you can do it online, it's not automated. It's a nightmare that thankfully, I only have to do once a year. Jeff
R David L Campbell November 27, 2011 at 05:38 AM
This issue is NOT about whether sales tax is due - it already is, and has been in the State of Illinois since 1933. Please don't confuse the issue before Florida and Congress with an entirely different debate about the merit or weakness of consumption tax (sales tax). While some, including Mr. Ward it seems, might make this out to be some sort of new tax, the absolute and indesputable fact is that the sales tax is already due on all purchases (online or in-person) - if a retailer fails to collect the sales tax at the time of a transaction, the consumer is still supposed to report and self-remit the generally equivilent "use tax." I will resist the temptation to respond to Mr. Ward's attack on sales tax being regressive, except to point out that EVERY state with a sales tax provides partial or complete exemptions for essential goods and services (things you cannot live withiut, such as grocieries, basic clothing, school supplies, etc.). Finally, regarding Mr. Ward's anxiety regarding complexity and burden, I would like to simply refer his readers and Mr. ward himeself to take a look at TaxCloud. It handles all sales tax management and complaince obligations for retailers entirely for FREE. It even provides indemnification, limitations on liability, and audit defense.
Jeff Ward November 27, 2011 at 01:33 PM
David, Yes! You are correct, but the bit difference is it's been up to individuals to remit it and not on businesses to collect it. And despite any software, under any current system, you'd still have to write 50 checks a quarter. That's a big expense for small businesses. Jeff
R David L Campbell November 28, 2011 at 04:25 AM
Actually, TaxCloud also remits the payments to all the jurisdictions automatically, while only requiring a single consolidated payment from the retailer.
Les Dixon November 30, 2011 at 03:21 PM
Geneva should think about the reasons business is leaving Illinois before pushing for Internet sales taxes. Taxes going to the State are mostly consumed by public employees administering the money. Internet sales produce jobs as facilities are needed to get the products to the customers. Amazon is the prime example but has closed operations in states where they are required to collect the taxes. How about the jobs created at companies like UPS(trucks go by several times a day). They already pay taxes. Illinois government should be a prime example of what happens when the legislature looks at taxes as entitlements! Who gets Sears headquarters-Ohio , Indiana or?


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