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E-Taxes And Federalism: The Internet E-conomy Is Virtually Redefining The U.S. Tax System

E-Taxes And Federalism: The Internet E-conomy Is Virtually Redefining The U.S. Tax System

The question is whether or not (and how) Congress should employ a new sales tax policy to interact with electronic commerce. This matter has put Congress at odds with the states on the subject of federalism and has recently become one of the most talked-about issues in partisan politics.

Those that support continuing the exemption from taxing e-commerce and mail order shipments usually tend to be conservative. These individuals claim that trying to implement traditional tax rules would negatively benefit this new division of the economy and that e-commerce poses only a minimal threat to traditional businesses, since internet companies tend to go out bankrupt.

Those in favor of developing a taxation plan for e-commerce argue that transactions should be taxed to benefit the state and local governments, citing the millions of dollars that are lost each year due to internet purchases.

I personally believe that the latter has a better argument, however, I think that we should continue the exemptions as they are today. I feel that traditional businesses still have the benefits of personal service and physical location that e-commerce will never be able to compete with.

If there were uniform, nationwide taxes on internet transactions, the only incentive for a consumer to buy online would be convenience. If the taxes had no effect on the number of purchases then the states would ultimately have a surplus of tax money. If the tax did minimize internet purchases, many internet companies would go out of business and parcel services would have to reorganize, while the states would continue to benefit from the consumers buying from local stores.

Alexander, Caroline. "E-Taxes and Federalism: The Internet E-conomy is Virtually Redefining the U.S. Tax System.
Source: Occasional Papers on the Digital Society, 2000

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