Cato Opposes Tax Cuts (Again)

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I just received in the mail a Cato Institute study entitled “The Internet Tax Solution” by Adam Thierer and Veronique de Rugy. The “Internet Tax Freedom Act of 1997″ expired on Nov. 1, and state politicians are scheming to tax the internet. The study discusses several possible tax policy options, including this one: “Specifically Exempt All Internet Sales/E-Commerce from Sales and Use Taxes.” There was a time many, many years ago, when one would expect a Cato study to at least make an argument in favor of this. But this study announces, in fine Samuelsonian/Galbraithian fashion, that such tax cutting would mean that “fundamental tax fairness concerns would be left undressed” and “a federal ban on all e-commerce taxes would obviously exacerbate existing tax exemptions and assymmetries.” Horrors! Let’s not exacerbate any assymetries in our otherwise symetrical tax system!

Another possibility listed is “Abolish All Sales and Use Taxes.” “This option could be achieved,” our authors concede, but only “by finding alternative revenue mechanisms to provide needed government revenues.” Under no circumstances should the size and scope of government ever be scaled back, in other words. (The authors do sheepishly mention that “government budgets could be trimmed,” but then dismiss the whole idea).

1:32 pm on November 5, 2003