Taxing the Internet, the Ongoing Struggle

The debate over internet taxation is a messy and complicated situation. As Americans, we have state taxes, property taxes, income taxes, etc., but no federal tax or tax on goods exchanged on the internet. This creates problems for states that wish to have a part of the millions of dollars that they could use for their own expenses. According to an article by U.S.News,

To get in on the cash flow, Web sales taxes have popped up in 22 states, with plenty more considering it. But that's scaring some online businesses and consumers.

Damaging the American spirit of entrepreneurship, internet taxation may cause small business to fail, considering the majority of transfers, purchases, and shipments are all done online. Words from one of these small business orders that is feeling the heat from these new tax laws was quoted saying:

"I don't mind paying for services that are delivered. But I don't see any connection between Internet sales tax and any service that the government is providing," says Travis Corcoran, one of the more than 27 million small-business owners potentially affected by Internet sales tax. Starting in his Arlington, Mass., house, Corcoran created two online businesses from scratch. His DVD rental service, SmartFlix.com, and comic book store, HeavyInk.com, now bring in about $1.25 million per year. Even as his companies grow, Corcoran says Internet sales tax "might wipe out my ability to run these firms."

I find myself on the side of government taxation on this one, but I feel that there should be a gradient of higher taxation for bigger companies and lower for smaller businesses. At least this way, states get some cut and they can use the money to recover from the recession.