QUESTION: Mr. Armstrong; The taxation of the internet seems to be rising. At the same time it appears as though this could really harm the economy by reducing competitiveness of small companies trying to comply with collecting taxes of so many different states. Have you looked at this as a possible factor in creating the next economic depression?

Thanks

BV

ANSWER: Absolutely. There is a tremendous clash of jurisdictions and governments are fighting for more and more taxes to pay government pensions. It has turned into a them against us confrontation and he who makes the rules typically wins until he provokes revolution. Most revolutions are ALWAYS over taxes as was the American and French Revolutions. The Supreme Court ruled in Quill Corporation v. North Dakota 504 U.S. 298 (1992) that there was nothing inherently unconstitutional about requiring out-of-state retailers selling over the internet to collect state and local sales taxes on orders shipped to in-state residents.  The only question was whether imposing such a requirement would cross the line from an acceptable burden on interstate commerce to an unreasonable one. That the Court did not decide. They claimed that technology had greatly eased the burden of collecting taxes for multiple jurisdictions, however, the Court concluded that Congress should make the call.

The ruling demonstrates how courts cannot be trusted to defend our liberty when those judging are appointed by the political machine. What if every state applied taxation based upon the same methodology that the Feds do. Lets say you were born in New York but moved to San Francisco. New York could then claim that since you were merely born there, you owe taxation to them on your income yet you use no services. California then imposes income tax on the theory you are a resident using services. Now you owe income taxes to two States plus the Feds. This would destroy the freedom of movement rapidly. Those who leave the United States suffer the same fate and owe taxes to the USA for the simple reason of their birth.

If the Congress enacted such a law demanding everyone on the internet are tax collectors for every possible taxing authority, the economy would collapse. Then cities could demand the same thing so places like Philadelphia or New York City that impose additional sales taxes of some kind would jump on the wagon and everything would collapse. Now you can see how revolution is born. Those in power always want more without regard for the consequences. This is why I have argued we MUST eliminate income taxes at the federal level and states must be restricted to their territory. No state has the right to impose any duty upon a non-resident of their jurisdiction – PERIOD. Forcing small business to collect taxes for every state would destroy small business and compels them to be quasi-government employees with criminal penalties for failure to comply, without any compensation.