Internet Tax Would Hurt North Dakota’s Tax Sovreignty

The North Dakota Taxpayer’s Association and the National Taxpayer’s Union have come out strongly against the Main Street Fairness Act arguing that it’s bad for internet business and would actually reduce economic activity in the state once deliveries of online purchases slowed.

Those are good arguments, but one question not being answered is what this federal legislation would mean for North Dakota’s ability to set its own sales tax levels. I’m a little suspicious of any federal law which binds our state tax code to the code in other states, and indeed that’s just what the law requires the state to do. And if North Dakota is deemed at some point in the future to no longer be in compliance with the law, it appears as though we’d lose all authority over our sales tax:

The proposed legislation…requires states to establish some minimum requirements, such as creating a “blended” single rate that is simple for online retailers to calculate, or providing the necessary software to allow calculation of tax owed based on a purchase within a taxing district.

Other state requirements include:

• Six months prior to the beginning of collection, states must publish a public notice about the legislation, detailing how to comply with the collection requirement and which businesses are exempt; and,

• State authority ends if a court determines the state is no longer in compliance and the decision is no longer subject to appeal.

Setting aside the debate over whether or not it’s fair for internet retailers to get away with not collecting the sales tax when brick-and-mortar retailers have to, any law which undermines North Dakota’s sovereignty on taxes out of be rejected out of hat.

I don’t think we need to sell our ability to set our own tax rates down the river to collect tax revenues the state doesn’t really need.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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  • Dakotacyr

    Oh please, where were you and the NTU on the trade agreements. Take a look at those and see where we lost tax sovereignty. Give me a break!

    • http://sayanythingblog.com Rob

      We didn’t lose tax sovereignty in the trade agreements.

      • Dakotacyr

        OMG, yes, we did.  Take a look.  of course we did. I happened to work for a taxing agency when NAFTA was being done and we had to look at our tax laws.

        • http://sayanythingblog.com Rob

          Setting an agreement on tariffs and trade policies with another country (which is a power the Constitution grants the Congress) is not the same thing as North Dakota locking itself into a federal law that can have our tax policy bet set based not on what North Dakotans want but on what other states want.

          • Dakotacyr

            we can’t tax foreign made products differently than products made in ND, even if we wanted to in state law.  Tariffs and trade policies do affect the tax ability of the states.  

  • Dustin Gawrylow

    Keep in mind that the Mainstreet Fairness Act contained 18 “MINIMUM SIMPLIFICATION REQUIREMENTS” that are by definition federal directives to states that adopt the Streamline Sales and Use Tax Agreement approach.

    http://www.newrules.org/retail/rules/internet-sales-tax-fairness/main-street-fairness-act

    So state sovereignty is being lost every which way.

    Frankly, this whole discussion is severely reducing my faith and interest
    in Interstate Compacts.

    Our policies should not be “harmonized” to match other states, even if we
    have people on the committee. That in and of itself is a loss of self-rule. Even if it is a legislatively delegated loss of self-rule.  

    With all these approaches, North Dakota is losing the ability to create a competitive tax advantage compared to other states. That is the key take-away.

    • Dakotacyr

      oh please, get a grip, we have interstate compacts for child support, child custody.  Creating a tax compact does  not reduce our competitive.

      Businesses don’t move because of tax advantages, that is far down on the list of why businesses move to a location.  It is access to a supply of workers, a good transportation system to get their goods to market, it is a social living environment for workers and a strong education system.  Those rate far above the taxing system for a competitive business environment.

      But since you are a one trick pony with a no tax attitude, you would try to make state sovereignty an issue.  That is the key take away.

      • http://sayanythingblog.com Rob

        There’s nothing wrong with compacts. I supported one during the session to nullify Obamacare. But this one, because of the obligations it puts on our tax code, is a bad idea.

        And yes, taxes are a very important consideration when it comes to businesses. Look at all the businesses leaving Illinois after that states tax hikes.

        You may not like the reality, but it’s reality.

        • Dakotacyr

          And you cannot obviously understand what I wrote.  Yes, taxes are a part but it is not the major reasons businesses relocate.  There is much more to a relocation or location of a business for that matter.  And that is reality.

          • http://sayanythingblog.com Rob

            And you cannot obviously understand what I wrote.  Yes, taxes are a part but it is not the major reasons businesses relocate.

            But that’s not what you wrote.  What you wrote was, “Businesses don’t move because of tax advantages.”  Now you’re at least admitting that it’s part of the calculus.

            And nowhere did I say that taxes were the only consideration.  Labor laws, regulatory environment and a lot of other factors come into play too.  But to say that taxes aren’t a major consideration is just plain stupid.

            If you don’t believe me, ask yourself why one of the major incentives economic development folks dangle out for businesses all the time is tax abatements.

          • robert108
  • Jimmypop

    all this says is we need to tell online retailers what our tax rates are in a timely way…you know, just like we have to do with local retainers RIGHT NOW….not unreasonable ONE BIT.

    rob, as long as our other taxes get cut PRIOR to this law coming into affect, this is a GREAT law. the government should ensure all are treated equally. but we all know it wont happen that way…..and for THAT reason alone, this should not be supported.

  • fredlave

    This may drive some internet merchants out of the US. All they would need is a foreign URL and mail the items from outside the US. One online merchant I buy from mail many of their items from China now. This will become more common if the law is passed.

  • Ratbite

    And who’s pushing the tax in North Dakota , Why just another big taxing, big spending, big government RINO that calls himself a Republican. THe ND Republican Party is fast dying due to suicide. I do not see how any self respecting conservative can support the ND Republican party & it’s big government , big spending, big taxing candidates.

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