No, it is at worst neutral toward the poor but far more likely a genuine help. And applying taxes to the Internet would, in any event, not help the poor at all.

The pro-tax argument goes like this: Since low-income individuals are the least likely to have Internet access, they are the least able to shop on-line. The poor will end up paying the lion's share of sales taxes as wealthier citizens escape sales taxes through untaxed Internet purchases.

To begin with, high sales taxes are already a major detriment to the poor simply because poor households spend a larger portion of their earnings on consumption and are thus more sensitive to sales tax rates. That is why most states, including Michigan, exempt purchases of essential items from sales taxes. Aaron Lukas points out that

If such exemptions work, then low-income households won't be affected by the growth of online shopping since most of their purchases are already tax-free. If the exemptions are ineffective, then the Internet at least offers a chance for the poor to escape punishingly high sales tax rates.22

In Michigan, the sales tax burden at six percent today is 50 percent higher than it was before Proposal A hiked it from four percent in 1994. Making sure the poor cannot escape paying six percent by imposing sales taxes on Internet purchases may assuage some egalitarians' troubled consciences, but it hardly extends a helping hand to anybody.

High sales taxes are a major detriment to the poor simply because poor households spend a larger portion of their earnings on consumption.

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