“No Taxation without Government Service”

by Martin Harris

The single most important reason for edu-crats’ dislike of the National Assessment of Educational Progress office within the US Education Dep’t –maybe it’s more like fear-and-loathing, which explains why, in 49 States, they have spent (and, in Vermont and Tennessee, are still spending) time and money to search out and adopt ever-easier non-NAEP student-achievement tests– is that NAEP bureaucrats do their job, exposing the pretty-much-basic information which students should have learned but didn’t. Case in point: the 1986 NAEP study of History Achievement, in which it was revealed that 57% of near-graduation students “did not know when the Civil War was fought”, 50% “did not know the purpose of the Federalist Papers”, and 49% “did not know the focus of Joseph McCarthy’s hearings in the 50’s”. In that context, the once-well-known phrase “No Taxation without Representation” won’t come to mind for younger voters when revised as “No Taxation without Service” in the present-day discussion of the InterNet sales tax question. Older voters, who navigated the 13 grades back when such history was actually taught, will recall not only the NTWR phrase but the Original Intent of government taxation: to pay for government services either actually used or on-hand- just-in-case. For the former, think the early National Highway tolls and the more recent gasoline tax, both allocated solely to highway users for construction and maintenance; for the latter, think the property tax for fire and police departments. Not until the century-later advent of the Progressive Movement did taxation acquire a new social-engineering purpose: wealth-levelling via income re-distribution.

Those nuggets of explanatory history, not being taught much any more, explain why there’s support amongst a majority of (younger) voters for the proposed InterNet sales tax, whereby no-in-State-presence electronic vendors like Amazon will be required to collect a sales tax for local governments just like the “bricks-and-mortar” local bookstore in the jurisdiction where the buyer lives. Totally overlooked in the ongoing debate over the record-keeping burden (there are supposedly some 9600 different taxing jurisdictions with different tax-structures) and the possible exemption of smaller-scale vendors, is the “use” part of what was once called a “sales-and-use” tax precisely because the Original Intent of such local consumption taxes was to fund a local service, for either actual or emergency use. Advocates for the InterNet sales tax don’t explain why the distant vendor who will never use the service (no building in-the-jurisdiction requiring local-government services) should pay for it as if he/she actually had a building entitled to such local-government services as police and fire protection, even street-sweeping and tree-planting.

Instead, they focus on “unfairness”, a recurring Progressive theme, the underlying rationale for such re-distributionist campaigns as upper-income surtaxes, regional “equity” governments empowered to tax more suburban wealth for inner-city spending, and, coming soon to an IRS office near you, a range of proposals to capture private wealth via direct taxation or take-over of, say, retirement 401-K portfolios while promising future pay-outs based on recipient “need”. It’s “unfair”, they argue, that in-store book-buyers should pay a local sales tax while Web purchasers don’t; but, when asked, they evade the question of why Web purchasers should pay added and visible shipping and handling charges while in-store buyers don’t. They don’t even try to evade the question of their distaste for retail price competition: indeed, serious attempts were made in the Progressive atmosphere of the New Deal decade to design “Fair Trade” (price-setting) laws disallowing competitive retailing tactics on the grounds that they were “unfair” to small-shop owners, and that such low-price injustice trumped any benefit to retail purchasers. That anti-competition mind-set shows up in today’s Progressive hostility to most big-box retailers (which, indeed, collect sales taxes for local governments) on the grounds that their larger-scale economies-of-distribution result in attractive prices which local mom-n-pop stores can’t afford to match. No matter that consumer retail spending has always been a quite-consistent percentage of disposable income, suggesting that any money not spent at, say the strip-development K-Mart, will then be spent at the little in-village local-crafts-and-flowers shop.

There were, of course, historical roots for what is still called “predatory pricing”, the idea that, once the mom-n-pop shops have been bankrupted, the K-Marts will then raise prices. And maybe Rockefeller had just such a long-range plan in mind as he pretty much cornered the kerosene market by means of questionable practices in the late 19th century. In the event, it didn’t happen: Edison came along with direct current and the electric light bulb, and when General Electric was formed to (perhaps?) try the same game-plan, Westinghouse came along with a superior alternating-current power-distribution system. End result: there’s not much market for either kerosene or DC any more: it was market competition, not governmental “fairness” enforcement, which enabled today’s remarkably (too much so, in enviro opinion) low end-user prices for AC electric power.

The No Taxation without Government Service” slogan, which once was the underlying principle behind sales-and-use taxes, has wider applicability than book sales through Amazon or clothing sales through Land’s End: it’s already the underlying question behind net-zero housing, where home-owners with rooftop solar panels sell power back into the system at profitable rates, even though the conventional poles-and-wires system still has to be funded by everyone who uses it (like their environmentally-obtuse dumb neighbors) or who might use it (like themselves, when the sun doesn’t shine just right) and questions of price- and cost-allocation are now being raised. They’re also being raised with respect to school taxes, by parents who have opted to buy a alternate service (or do-it-themselves, at home) who now question the basic sales-and-use tax question: why should they pay for a service they don’t and won’t, (unlike fire protection) ever use? The outcome-uncertainty doesn’t derive from the logic of their NTwGS argument as it does from the question of their political clout to demand it; at less than 20% of the universe of households-with-school-age-children, they don’t yet have it. If it were so (subjunctive contrary to fact) taxes raised for public education would support each student at the school of his/her parents’ choice, not the government-school-system only, in overt disregard of the parent’s choice, as shown by their own spending decision.