As if to add insult to injury, this year’s National Defense Authorization Act will not only authorize the indefinite detainment of U.S. citizens suspected of terrorism, but also allow a new sales tax on internet sales. According to the Daily Caller, the bill to allow a sales tax would be attached to the NDAA, despite having nothing to do with it.
The Marketplace Fairness Act, and its House counterpart the Marketplace Equity Act, seek to clarify, and arguably overturn, a 1992 Supreme Court ruling that requires retailers to have a physical presence in a state in order to collect sales tax on goods.
Many critics claim that this new tax–which each state would be free to enact or not–would be detrimental to small online businesses, which are the hope of future economic growth. Supporters say that an online tax would encourage people to shop locally instead of online, keeping money in their communities. The tax would still siphon more money out of the private sector, and deliver it to the inefficient, wasteful hands of the government. Is this new tax suddenly going to allow us to balance the budget or pay down the debt? Or will politicians just find more things to spend our money on, more loans to companies like Solyndra, more foreign aide to countries that hate us, more people collecting welfare, and more special interests getting payouts with tax dollars? I think we all know the answer to that.
Taxes discourage productive behavior, because they decrease incentives to produce. When the reward of taking a financial risk is decreased, fewer people will take that risk. These risks are what expand our economy, in the form of product research, company expansion, and capital to start new companies. When the government takes money from the private sector to spend in their own way, they do not have the same capacity to encourage economic growth. This is because the government is not taking a risk, the taxpayers are collectively taking a risk, meaning more government sponsored projects will fail than privately sponsored projects. The incentive to avoid the most risky financial decisions is not present in government, because the failure of a government investment is not detrimental to individual politicians.
The private sector would never have invested in Solyndra, because the risk was too high that they would go out of business thus offering no return on the investment; there were warning signs. In the private sector this money would have been much more likely used to create a successful company, with lasting jobs, and actual beneficial advancements in their stated goal–alternative energy. The money taken out of the private sector, and given to Solyndra did harm to the private sector by removing available funds for investment–investment that on the whole would have been more successful because the people taking the risks would be personally affected by the outcome. Now the $500 million dollars that could have provided lasting jobs, and the production of useful commodities, are instead lining George Kaiser’s pockets (the billionaire and main investor in Solyndra who was paid back in the bankruptcy, even though the taxpayers were not).
The government already has trillions of dollars in tax revenue to work with each year. If they cannot balance a budget with $3 trillion to work with, what makes anyone think they would balance the budget with $4 trillion to use? The government would simply find more things to spend money on, then once again insist that taxes be raised to cover the gap. We have far surpassed the place where the government collects only enough funds to fulfill its’ specified responsibilities laid out in the constitution. Any amount of taxes raised over the basic costs of government operation (which was really just national defense originally), is a detriment to our economy, because it puts money into less productive hands by allowing the government to choose the recipient. The private sector will always choose more winners than the government, because they have a financial incentive to invest in success, and a financial disincentive to choose a failure. The government does not care how many failures it dumps money into, because the politicians have already seen the benefits of these investments in the form of campaign contributions and votes.