Ron Paul for Business Insider: The Internet Tax Mandate Is Backwards Thinking

May 1st, 2013

Business Insider
By, Ron Paul
May 1, 2013, 5:37 PM

David French, Senior Vice President of the National Retail Federation, the major industry group lobbying for the so-called “Marketplace Fairness Act,” (more aptly named the “National Internet Tax Mandate”) recently commented that “….the law [governing Internet sales] today is a 20th-century interpretation of an 18th-century document….” Mr. French’s comments are typical of those wishing to expand government power beyond the limits established by the United States Constitution.

Those of us who insist the federal government remain within the confines prescribed by the Constitution are used to condescending lectures about how the Constitution is a “living document” whose principles evolve over time. I was even once informed by the then-Chairman of the House Committee on Foreign Affairs, who was widely considered one of Congress’ leading constitutional authorities, that the constitutional requirement for a declaration of war was an anachronism!

While Mr. French may not go that far, he is arguing that Congress turn the Commerce Clause on its head by passing the Internet Tax Mandate. The Commerce Clause was intended to facilitate free trade by giving the federal government limited power to ensure state governments did not impose taxes and regulations on out-of-state business. Contrary to modern belief, the Commerce Clause was not intended to give Congress power to regulate every sector of the economy. And the Commerce Clause was certainly not intended to allow Congress to help state governments collect taxes on purchases from out-of-state merchants.

The National Internet Tax Mandate overturns the Supreme Court’s 1992 Quill v. North Dakota decision that states can only force businesses to collect sales tax if the business has a “physical presence” in the state. Quill represented a rare instance where the Supreme Court properly interpreted the Commerce Clause. Thanks to the Quill decision, the Internet has remained a tax-free zone, though some states require consumers to later pay taxes on products they purchased online. This freedom has helped turn the Internet into a thriving and dynamic sector of the economy, to the benefit of entrepreneurs and consumers.

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