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At the time of writing, 16 states are considering legislation to enlist in a “cooperating sovereignty” arrangement to force out-of-state businesses to collect their taxes. Two versions of the legislation exist: one proposed by the original cartel, the “Streamlined Sales and Use Tax Project,” (SSTP) and a slightly different version proposed by the National Conference of State Legislators (NCSL).
Both cartel proposals would create an extra-constitutional bureaucracy, that would be governed by representatives from member states. The SSTP plan would grant the first five states to join the cartel governing authority to set policy and approve or reject new members. By contrast, the NCSL is an equal opportunity cartel: It would grant all new members voting authority and an initial status of “governing state.”
The effort to create a tax cartel to collect use taxes is an attempt to push the burden of tax collection onto consumers. States currently possess the power to collect use taxes from their citizens, but do not do so effectively because of the public aversion to the practices necessary to collect the tax.
Oregon must defend itself from such a desperate and ill-conceived proposal. If other states wish to drive investment outside their borders and compromise consumer privacy through state-sponsored accounting software and trusted third parties, that is their mistake to make. But there is no reason Oregon’s consumers should fall prey to such a twisted scheme.
The Oregon Internet Tax Ban of 2001 is desperately needed to ensure that Oregon’s consumers are not forced to pay the higher prices that would necessarily result from the cartel’s increased regulatory burden. The ban would also draw high-tech dollars away from states with less competitive regulatory environments to Oregon.