Where I Stand — Mike O’Callaghan: D.C. steals state taxes

Friday, Jan. 18, 2002 | 4:36 a.m.

Closer to home Assemblyman David Goldwater, D-Las Vegas, and state Sen. Mike Schneider, D-Las Vegas, also could see the tax problem threatened by Internet sales. Congress put the clamps on all state-proposed solutions and that ended any further action.

Many of the arguments against allowing states with sales taxes to include the Internet have been put forth by people who don't see the possible damage such tax-free sales can do. I received letters that said the sales aren't large enough to hurt any state or local retail business. Other arguments included the need to ban these taxes until the Internet becomes strong enough to compete with the local retailers. None of the anti-tax gang gave much consideration to the taxpayers as people. Of course, there was the usual cry that there should be no new taxes. Sorry folks, taxing Internet retail sales isn't a new tax, but merely the fair application of a present tax. Any sales tax is regressive in nature, but taking even more from the people who can least afford it is doubly so.

Two years ago Business Week magazine told readers, "To compensate for the loss in tax receipts, which contribute about 40 percent of state revenues, governments may have to raise sales taxes. The burden would fall most heavily on people who don't shop online: The poorest 20 percent of Americans -- those earning less than $25,700 per household -- who already pay about 3.5 percent of their income in sales taxes. By contrast, the top 20 percent earners, who make $75,000 or more, pay just 1.3 percent. The more these upper-income shoppers buy at the virtual mall, the less they'll contribute to the cost of running public schools, hospitals and police departments." Also the economists for the National Conference of State Legislatures estimated that Internet sales had deprived states of $1 billion in 1999. They went on to project that by 2003 these losses could ju mp up to $14 billion.

Two weeks ago we were told that Internet retail sales increases outstripped the increases of store sales during the most recent holiday season. One report says that during the same season in 2000, Internet sales were $4.93 billion, and in 2001 they are estimated to have reached $6.57 billion. What will it amount to during the holiday season in December 2002? Just how many increases have to hit local retailers and state treasuries to get the attention of Congress?

Nevada Gov. Kenny Guinn has put together a task force to evaluate the tax revenues the state needs during the coming years and make an evaluation of our tax structure. This has been done several times during the past 35 years, but little has been accomplished.

May I suggest this governor's task force first of all find where the treasury leakage is and where savings can be made. More than a little time should be spent studying the present and potential losses that Internet tax-free sales have on Silver State revenues. If it has the impact I predict, then the five members we have in Congress next year had better get involved to remove the tax ban it extended last year.