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Supporters of the Internet sales tax continue to pitch it as a “fairness” issue – but experts say the tax would do costly damage to our economic recovery.
The Internet sales tax would allow states to make online retailers collect taxes on purchases. It would replace a 1992 Supreme Court decision that said a state can’t force a retailer to collect sales tax unless the retailer has a physical presence in the state.
State and local governments support the bill, claiming they are losing tax revenue under the current system. Several big-box merchants, brick-and-mortar stores, and mom-and-pop shops back the bill, arguing online retailers have an unfair price advantage.
But Illinois Policy Institute’s Ted Dabrowski told FOX Business Network’s “Varney & Co.” this tax wouldn’t achieve any of its promises.
“Anybody who tries to pitch this new tax as a fairness tax is not telling the truth,” said Dabrowski. “What this really is is a money grab. It’s a money grab by states like Illinois, New York, California who don’t manage their own budgets and are not fiscally responsible. And it’s another Obama tax on the middle class, it’s another tax on entrepreneurs, and it’s just the wrong thing for our country. It’s a job killer.”
Dabrowski told host Stuart Varney that Illinois tried taxing the Internet retailers two years ago, but it was a “failure.” Dabrowski said the state government expected the tax to raise $150 million, but after three months had only collected $3 million.
That’s because online retailers left the state to avoid the tax and set up shop in more business-friendly states. The smaller online retailers had to shut down because of the added expense.
The bill probably sounds familiar. A similar one made the rounds in 2012, but expired.
Now it’s on the fast track to get passed, thanks to persistence by Sen. Harry Reid (D-NV).
According to a letter sent to Reid from seven U.S. senators, Reid used a procedural maneuver to avoid the typical committee process and rush the Senate’s vote on the bill, known as the Marketplace Fairness Act.
It passed a test vote Wednesday 74-23, and could come up for a final vote as early as today (Thursday).
Coburn lambasted Congress for allowing such waste to go on despite a budget crisis and, most recently, a budget sequester that has forced $85 billion in cuts to many vital services.
“Instead of preventing furloughs, reopening air traffic control towers and restoring public access to the White House, Congress and the [Obama] administration continue to defend billions of dollars in duplicative programs,” Coburn, who wrote the amendment that requires the GAO reports, said in a statement.
Similarity Breeds More Wasteful Government Spending
The sort of duplicative spending described in the GAO report is in addition to the $18 billion in wasteful government spending Coburn spotlights in his annual “Wastebook.”
Most of the “Wastebook” programs shouldn’t exist at all. The programs in the GAO report, on the other hand, are mostly legitimate. We just don’t need two, three or 100 different versions of the same thing.
For example, the GAO found:
- The Food and Drug Administration, the National Marines Fisheries Service and the Food Safety and Inspection Service each run similar catfish inspection programs, wasting $14 million a year.
- Eighteen overlapping programs spent a combined $2.5 billion last year on food and nutrition assistance.
- Ten different federal agencies operate 82 programs devoted to teacher quality.
- At least 23 agencies spent $15 billion last year on 679 separate renewable energy programs.
- Ten cabinet-level agencies spend $4.5 billion a year on 76 drug abuse prevention and treatment programs.
- The Defense Department has 10 sub-agencies spending between $50 million and $200 million with 159 contractors to provide foreign language support to the Pentagon.
- Five divisions with the Department of Transportation run at least 100 different highway, rail and safety programs, including 55 separate highway programs alone.
- Dozens of different economic development programs are spread among the Department of Commerce, Housing and Urban Development, the Department of Agriculture and the Small Business Administration. The programs include 52 programs for “entrepreneurial efforts,” 35 programs for infrastructure and 26 for telecommunications.
- There are 80 federal programs to help disadvantaged people with transportation, 47 for job training and employment and 56 to help people understand finances.
“While millions of Americans have been doing more with less, the federal government continues to do less with more,” Coburn said.
How Wasteful Government Spending Happens
Some duplicated wasteful government spending occurs because one hand doesn’t know what the other is doing – not surprising, given the monstrous size of the federal bureaucracy.
“The government agencies don’t exchange information about their funded programs. There’s no centralized place where all this stuff could be managed and searched and discovered,” Virginia Tech professor Harold “Skip” Garner, who did a study on duplicative federal grants, told USA Today.
But a lot of wasteful government spending of all kinds happens because individual members of Congress take pains to protect any spending that occurs in their district.
“The challenge here is that one man’s trash is another man’s treasure,” Ron Bonjean of Singer Bonjean Strategies told CNN Money. “While some of [the spending] may sound or look ridiculous, there’s always a member of Congress defending it.”
So while the GAO report’s numerous recommendations on how to reduce duplicate spending to save money have widespread support from congressional Republicans, Democrats and the Obama administration, don’t expect much to change.
“The Obama administration promised to root out redundant programs in the president’s budget, but don’t count on it,” Steven Greenhut, vice president of journalism at the Franklin Center for Government & Public Integrity, told The Daily Mail. “The government is wasteful, regardless of what president is in office. The real problem is the federal government continues to grow well beyond what is healthy for its citizens.”
For more outlandish uses of government money, check out this report: This Year’s Most Outrageous Examples of Wasteful Government Spending
Related Articles and News:
- Money Morning:
Sequestration Cuts Hit Cancer Patients While Billions Wasted - USA Today:
Report: Redundant federal programs waste billions - The Daily Mail:
As budget fights loom and federal government workers get furlough notices, Congress questions ‘tens of billions of dollars’ in Washington waste - CNN Money:
Why Washington can’t cut wasteful spending - The Wall Street Journal:
Billions in Bloat Uncovered in Beltway
This is a syndicated post, which originally appeared at Money Morning. View original post.
