Posted on 06/20/2002 2:49:17 PM PDT by xsysmgr
America's retailers — who for years have been the victims of the tax-and-regulatory crowd in Washington and America's state capitals — are now taking a page from their opponents' playbook. They're using the courts and political stiff-arming to gain economic advantage.
The Supreme Court this week disastrously has allowed a class-action suit by many of America's leading retailers against Visa and MasterCard to go forward. The suit — potentially the largest class-action litigation in history — claims that it is unfair for MasterCard and Visa to require stores who accept their cards to live by the companies' rules, such as those requiring them to take debit cards.
Instead, the retailers want the credit-card companies to operate in ways that best suit the retailers. This advocacy of outside interference in how the credit-card companies do business is ironic, given that these same retailers have long fought against government bureaucrats and other outside parties dictating how they should run their businesses.
Beyond the legal issues directly at stake in the case, the real damage for the economy in the long-term may be the Supreme Court's acceptance of very minimal standards for establishing a class-action suit. Expect an explosion in class-action suits against corporate America.
The American Bankers Association has rightly observed that without guidance from the Supreme Court, money-hungry trial lawyers will now be able to engineer litigation and "have whole industries face off in the district court, rather than in legislative chambers or in the marketplace." So the very class-action principles that are being established with this case will most likely come back to bite the plaintiffs — such as Wal-Mart — who are leading this charge. Once again, American companies have confirmed Milton Friedman's observation that "business, in general, has something of a suicidal instinct. It often proposes laws in its own self-interest which destroy the underlying basis of the whole private enterprise system."
Many of these same retailers have been active in state capitols as well as in the courtroom. For several years, they have been pushing for the creation of a new nationwide sales-tax regime on all purchases made over the Internet, in order to throw an anchor around the economic fortunes of Internet-based retailers. Indeed, a 1999 study by the National Bureau of Economic Research concluded that applying existing sales taxes to the Internet would slash the number of online buyers by 25% and reduce purchases by 30% or more.
The retailers claim that their tax scheme is driven by "fairness." They argue that without this new sales-tax monstrosity, Internet sellers are supposedly "escaping their obligation" to fund "needed government services." But nothing could be further from the truth.
Businesses in America — those on the Internet or those not yet on the Internet — are already overtaxed through a great variety of levies. Some of the more prominent ones include: corporate income taxes, personal income taxes, property taxes, and literally hundreds of different types of fees. When you buy a CD on Amazon.com, you may not pay sales tax, but there are plenty of other taxes already embedded in the price.
The American economy would be much stronger if retailers, rather than trying to shackle their competitors with new government burdens, focused instead on building up their own online presence. Of course, if the "brick and mortar" retailers win their fight to establish a new Internet tax regime, their burgeoning online affiliates will be paying the same new steep price as everyone else. Once again, as they sow, so shall they reap.
One can understand why the businesses who have long been punished by the excesses of America's political and legal system would want to turn the tables. But the bad news for them is that victories they win today will likely prove very costly to them in the long-run.
— John Berthoud is president of the 335,000-member National Taxpayers Union.
According to NPR, Arkansas Governor Mike Huckabee's opponent in the election this year -- Jimmie Lou Fisher -- came out in favor of imposing taxes on internet transactions.
The banks, of course, are pulling in tremendous amounts of money from this practice. The author of the article seems to think that profit is only a motive of the retailers and not the banks. Personally, I feel the retailers are in the right on this one, even if I do disagree with their stance on internet sales taxes.
Seems like Wal Mart is going for a one-shot big money pickup
They may be correct, but as to whether they are 'in the right,' I would
suggest that the banks are charging for the use of their product,
the debit card. If the retailer doesn't want to pay the service charge,
then pass it on to the customer, as the pay-at-the-pump stations often
add twenty-five cents and more to compensate. Going to
the government is inviting the very crap that Home Depot
is leading the way out of.
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