Josh Barro serves up a nice counterexample: sales taxes across the US states. He here notes one important problem with requiring internet vendors to remit sales taxes to the buyer's state: too many states have thoroughly insane sales tax codes. Dealing with one state's code is bad enough. Pile fifty of these on top of each other, and well....
He gives one way forward for an internet sales tax: administer it among states willing to run a single less-crazy state sales tax code. I expect that inefficiencies caused in the US by the absence of an internet sales tax are pretty second or third or fourth order compared to the gains that could be had by abolishing the home mortgage interest deduction and getting rid of the special tax status of employer-provided healthcare. Heck, getting rid of the kinds of things that make it really hard to implement a national internet sales tax would probably do at least as much good as implementing the national internet sales tax. If it's distortionary that I can avoid taxes by ordering a book from Amazon rather than wandering over to a book-shop, how about the purely within-state distortions that have to be present when you need tax memos on ice cream?
New Zealand's GST is remarkably clean. It's easy to defend a very bright line on a clean tax code without any of this nonsense in it. Down the path some here wish to tread lies 1437-word memos on what counts as an ice cream cake. That's inside-the-asylum stuff. Let's stay outside of the asylum.
- Seamus on GST basics
- Seamus on the illusory benefits of GST exclusions
- The GST is not regressive.
- Seamus on Canada's messed up GST
- More American sales tax insanity.
- Australia needs expert witnesses from Italy to decide whether a cracker is bread or not because it has a stupid tax code that treats the two things differently.