Every Thursday in Citizenship Confusion, Alan Noble discusses how we confuse our heavenly citizenship with citizenship to the state, culture, and the world.

Image: Heritage Foundation. PS–no one is treading on the Internet.

The first thing you need to know about the Marketplace Fairness Act–commonly known as the Internet Sales Tax Act–floating around Congress and provoking much scorn and praise on the Internet is that it is not a new tax. Despite what you’ve heard this is not an effort by the Federal Government to raise our taxes.

It is designed to help curb your tax evasion.

Currently, in all but five states, residents are required to pay sales tax on items regardless of whether or not they bought them online or over the phone or in a catalogue or in a “brick and mortar store.” States have had to rely on the honor system to collect sales tax on online sales, and virtually no one is honorable, apparently. Depending on your state, you are required to self report and pay sales tax yearly. However, most people are oblivious to Use Tax, as it is called, and those who do understand that they are legally required to render unto Caesar his sales tax find it extremely difficult to do.

We buy so much online and from so many different sites that it is difficult to keep track of what you have bought and whether or not it was taxable, and whether or not the site collected sales tax.

This is a mess. And for Christians who take Christ’s command to render unto Caesar seriously, Use Tax is burdensome and impractical. The Marketplace Fairness Act attempts to change all this by requiring all online sellers who do more than $1 million in sales a year to collect and pay sales tax. Instead of me having to keep track of all my Internet purchases all year long, the pressure is put on the stores to collect and pay the taxes. There are two major arguments in favor of this act:

1. As you may have noticed, local governments across the country are in serious financial trouble. By making online sellers collect sales tax, states should collectively gain billions in increased revenue each year.

2. By not requiring online sellers to collect sales tax, the State has allowed these sellers to essentially offer 8.5% (in my county in TX, at least) discount on all items. Except that the discount comes from the buyer evading tax laws. This law levels the playing field, uprighting the unfair advantage online sellers have been able to exploit by profiting off of a system which encourages tax evasion.

The bill is not without its problems. Specifically, there is the logistical nightmare of sellers having to keep track of the 9.6k+ different tax jurisdictions in the US and send them their money. For a small company, this effort seems an undue burden.

However, the law specifically contains a provision which requires states to streamline and simplify the tax process before they can require online sellers to collect taxes–which is pretty brilliant if you think about it. If states want to see the revenue owed them, then they need to make it reasonable for businesses to collect and pay them sales tax.

Image: Heritage Foundation. PS. This lady is probably not doing over $1 million in sales.

Some critics have responded that even with the simplification requirement the law is too burdensome on small businesses and that the limit should be raised from 1 million to 10 million. But this strikes me as deeply problematic. We should always craft laws with the intention of reaching 100% compliance. Raising the application of this law to businesses with over 10 million in sales effectively assumes consumers who shop at smaller stores will simply evade sales tax. Instead, if this act is to be modified, there should be even more stringent simplification requirements. The emphasis should be upon making the law reasonable and practical to follow, not to raise the bar until it only applies to those with enough money to comply. Because the latter is really just another way in which the State criminalizes its citizens through kafkaesque laws.

Another objection is that it is unfair and bad for the market to tax online sales, as they cost local governments less. Cities and states do not need to pay for the same infostructure for online stores, so they should demand less taxes. However, this objection favors tax evasion over tax enforcement. Instead of arguing that we should change the tax laws to make sales tax for online sales obsolete or reduced, some opponents simply argue that we should not enforce the current laws.

We should have discussions about whether or not it is appropriate to tax online sales, or at least, to tax them at the same level. But it’s not acceptable to argue that we should have a law taxing these sales and then make it so complicated to follow that the vast majority of people break the law.

What troubles me about many of these objections is that they stem from a sense of entitlement. Sellers feel entitled to not collect taxes and to the competitive advantage this provides them. Buyers feel entitled to not have to pay sales tax online. But neither of these are our legal entitlements; they both rely on widespread violation of the law–even if it is a bad law.

Image: Heritage Foundation. PS. The “Internet sales tax” is already a tax. And not paying it hurts local governments.

As a Christian who feels obligated to submit to governing authorities and to render unto Caesar, it is imperative to me that the current system is changed. If we want our citizens to obey the law, then the law must be reasonable and practical, as well as just. I am not convinced that the current version of this act is the best way to bring about such a law, but I do know that the current system is neither reasonable, practical, or just. And that it is yet another part of our litigious culture which turns citizens into criminals. Unfortunately, some Christians and Christian organizations have bought into the skewed rhetoric that they are entitled to tax-free sales, but they aren’t.

The pull towards increasingly draconian, kafakaesque laws which make unassuming citizens into criminals is powerful in our growing government. And acts like the Marketplace Fairness Act which make it practical to comply with laws will not stop this movement. But if Christians believe that our governing authorities are appointed by God, and that we ought to submit to them, then we must advocate for laws which make that possible.


  1. To be consistent, you have to not only oppose raising the compliance threshold to $10 million, you have to want it done away with altogether, right? As you say, the goal should be 100% compliance. Everyone, down to the smallest Etsy sellers, should have to collect sales tax.

    My problem with the bill is that it’s never made sense to me why it should be the responsibility of a buyer to pay “sales” tax on a purchase he makes from a seller living in another state. I live in Kentucky. If I drive across the river to Indiana and buy something in a store there, Kentucky doesn’t expect me to pay use tax on that purchase, because I’ve already paid sales tax to Indiana. So why should Kentucky expect me to pay use tax on that item if I order it from the same Indiana seller online? If any state is entitled to that tax revenue, it should be Indiana – after all, the seller is located in Indiana, the stock is warehoused in Indiana, the purchase is almost certainly processed on a device located in Indiana, and the item is shipped from Indiana, so you can make a pretty compelling case that the sale is taking place in Indiana. If I call an Indiana store, buy something over the phone, and have it shipped to me, I pay Indiana sales tax. The Internet is no different.

    If the bill said that online sellers are responsible to pay sales tax to their own tax jurisdiction just as if they were running a B&M store, it’d be much simpler to enforce and much simpler to comply with, and it would make sense. It would actually be a sales tax enforcement bill. As it is, it’s trying to enforce “use tax,” something I’m not even sure is a legitimate thing.

    Now, whether I’m still obliged as a Christian to pay even unjust taxes is a whole separate discussion.

    1. Jeff,

      Here’s the thing, this law doesn’t create the problem with Use Tax, it just brings it to a head. Whether or not this bill passes, if you buy a book online from an out of state retailer who does not collect sales tax, then you are legally obligated to report and pay Use Tax (the same amount as the sales tax) to your tax jurisdiction.

  2. Jeff, the burden of sales taxation is on the location of the purchaser, not the seller. Probably all of the ingredients in your Big Mac come from states other than the one you bought it in, but you pay sales tax in the place you purchased that product. That is how it’s always worked.

    1. Not true. You paid taxes based on the location of the McDonalds, not based on where you, the purchaser, reside. If I fly to Hawaii and buy a Big Mac there, they don’t charge me Washington State sales tax. The burden of sales taxation is on the location of the SELLER.

      That’s how it has always worked.

    2. What does your answer have to do with my reply? I never said anything about use tax.

      According to Andrew’s example, you pay tax based on exactly where you are at the moment the purchase is made, regardless of the store’s location. The fact that I am standing in a McDonalds in Washington has less to do with the store being located there than it does me being there at the time I order my sandwhich.

      If that’s the case, then if I place my order for a Big Mac from a cell phone in Oregon, do I owe zero sales tax? Of course not. I still owe them sales tax because the McDonalds I’m ordering from is in Washington.

      Like I said before, I don’t mind the general concept of the new law, but it should be changed to be based off of the location of the seller instead of the buyer.

    3. I didn’t buy the ingredients from all over the country. McDonalds did, and they likely paid sales tax at those locations where they bought lettuce, etc. I bought a sandwich from them at the store, which is why I’m being charged sales tax based on the store’s location.

  3. Andrew, I’m not sure how the Big Mac illustration is relevant. And I think your assertion “that’s how it’s always worked” is perhaps questionable – again, when I call a store in another state, give them my credit card number, and ask them to send me a widget, the receipt that comes in the box has the sales tax for their jurisdiction on it, not the one where I live. They’re treating my phone order as a proxy for my physical presence in the store. Are they doing it wrong? I don’t know. I know their state isn’t going to refund the tax they collect on that purchase, and I know Kentucky isn’t going to require me to pay use tax again when I’ve already paid it.

    In any case, all I’m saying is that it would drastically simplify things to make sales taxes remittable to the jurisdiction(s) where the seller is located, not the buyer. Instead of keeping track of nearly ten thousand different jurisdictions and rates, the seller would be obligated only to as many as it had presences in different places. It would be more fair, too, keeping the tax revenue in the location where the bulk of the economic activity that goes into a sale takes place.

  4. Sir, you are working on your post grad degree in Transcendence in Am. Lit. What makes you think that that qualifies you as an expert in economics? Sorry, no cred! Guess what…I have an MBA, with emphasis in Economics, am multi-published in that field, and with many years experience both teaching and in the business world as a CFO.

    First, America was founded upon the principle of no taxation without representation… and just how are people on the East Coast supposed to get representation on the West Coast? Oh, yeah, you want to make it Federal Law…but it’s each State’s responsibility to set it’s own taxes…or not. But that brings up the Constitutionality of the whole affair. If the 10th Amendment of the Constitution still means anything, the Federal Government has no business sticking it’s nose into State Sales Taxes…ie. it’s unconstitutional!

    Second, The entire idea leaves the door open to a Federal Value Added Tax. You know, let the federal gov. collect all taxes and dole pitiful “Please, sir, I want some more” portions back to the states, Europe did that. Do your homework. That hasn’t worked out so well. Europe is almost universally BANKRUPT! It leaves absolutely no incentive to reduce spending, and increases central control, which BTW, is the major problem with every government on the face of the Earth

    And last of all. I find your quoting of Jesus’ words, “Render unto Caesar” to be utterly sanctimonious, and repugnant, bordering on blasphemous! The United States of America is a Representative Republic, such a thing as was never heard of in Jesus’ time. When this country was formed, it was founded upon the responsibility of the individual CITIZEN to God, not the obedience of the SUBJECT to a CAESAR! We have repeatedly and lawfully petitioned our government to reduce spending. They have ignored us and increased spending illegally, even under the sham of sequester. How dare you try to try to put a religious guilt trip on law abiding CITIZENS about something you know nothing, and are only qualified to regurgitate Progressive propaganda. Shame on you! You are indeed Confused as to your Citizenship Responsibilities.

    1. Frances! Hi! How’s it going?

      To your first point, you don’t appear to understand this act. No citizen would be paying taxes to a jurisdiction outside of their local jurisdiction. If I bought a book from an online retailer based in CA while I live in TX, they would have to collect my TX sales tax and send it to TX. So, I would be paying taxes to the local economy which represents me.

      Second, that’s a slippery slope. It might happen, it might not.

      Third, you must find nearly every single orthodox evangelical teacher, theologian and pastor “sanctimonious, repugnant,” and “bordering on blasphemous,” since it is the standard evangelical interpretation of the text that “rendering unto Caesar” directly applies to our obligation to pay the taxes required by our government. And since the vast majority of citizens, including Christian ones, fail to pay Use Tax on items bought from out of state sellers, they are breaking the law–evading taxes–and failing to fulfill Christ’s command to render unto Caesar.

      In any event, if you’re ready to have a civil conversation, drop by again sometime. Otherwise, you may take your “shame” and ALL CAPS elsewhere.

    2. “Guess what…I have an MBA, with emphasis in Economics, am multi-published in that field, and with many years experience both teaching and in the business world as a CFO.”

      First paragraph: American Constitutional Law

      Second paragraph: Political Science

      Third paragraph: Theology

      Not sure why you established your credentials in one field before proceeding to display your vast ignorance in three others. . . . How shall I put this? “Sorry, no cred!”

      Very foolish, and pompous and rude, besides. Pretty sad display, especially if your credentials are genuine. The educated, successful person you describe is a person who ought to know better.

  5. Actually, raising it to $10 million makes it a more even playing field. Walmart and Amazon can afford an armada of accountants who can keep track of everything. Someone who pulls in four million in gross sales can afford maybe one accountant to keep track of everything. Someone with less than one million in gross sales probably can’t afford an accountant (remember, in a business, especially a small one, “profit” is usually put right back into the company).

    If someone who grosses eight figures pays the same tax as someone who grosses 5 figures or 6 figures, then it’s not equal or fair. It’s quite unfair.

    All that to say I agree with an internet sales tax, but increasing the spectrum of who pays isn’t fair. I’m all for low taxes on small businesses (or no taxes) and higher taxes on big corporations. Right now it’s the opposite, and that’s not fair.

  6. Alan,

    I agree with you. We should be paying taxes on all our purchases, and it would be great if our gvt. made it simpler to do so.

    May I humbly ask you a (I’m sorry) provocative question? I hope you take it seriously.

    Do you always drive the speed limit?

    You certainly take “render unto Caesar” seriously, as do I. The question, I’m aware, has little to do with taxes and increased revenue. I am sincerely curious to know if you obey laws selectively. Because you do seem to be guilting Christians in your post to some degree.

    To let you know where I stand on the laws of our land: I never pirate anything, ever. I don’t copy music from friends or family. I don’t use non-prescribed drugs. Once I was on parole (obviously, I broke a law) for a non-alcohol/drug related offense, but my parole stipulated that I drink no alcohol anyway (obviously no drugs or guns either). For nine long months, I had not a drop of wine at my dinners out (or in). I really do my best to obey all the laws that I know of. But I don’t always drive the speed limit. I’m not proud of this.

    The Pharisees put a burden on the people so heavy it was, I read, like asking them to hold a mountain up by a hair. Our government, with it’s ever-changing multi-thousand pages of tax laws makes our burden pretty heavy. I’d like them to make it simple for all of us to pay all the taxes we owe, rich or not. And as a doc, I’d like the taxes on cigarettes and alcohol to be higher to compensate for the burden of health issue costs on heavy users, but that’s me.

    Again, I agree with you about the taxes. However, I’d love to know that you are as fervent about all laws as you are about this one. Because you really are guilting us.

    1. Susan,

      I do try to keep the law, but I don’t do it obsessively. It was certainly not my intention to guilt anyone. Quite the opposite, my point was that under the current laws its impractical to obey the laws, and if we take rendering unto Caesar seriously, then we should advocate for reasonable laws. I do not pay use tax perfectly. I’d like to, and I certainly try, but I don’t think keeping an impractical law scrupulously is the Greatest Good.

      All that to say, please don’t take this as a guilt trip. It is absolutely not meant to be. If anything, I’d like it to be an encouragement for how we out to advocate for just and reasonable laws, so that we can submit to governing authorities.

    2. Alan,

      Thanks for replying. And thank you for your honesty. I respect you for it.

      Advocating for just and reasonable laws so that we can more easily submit is a wonderful objective. In that spirit, thank you for your call to paying increased attention (and taxes) to this issue.

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