Opinion and Viewpoint

HENDERSON: Don't choose between online tax and estate tax

January 14, 2012

LeCrone mugWe need both. Adding a tax for online purchases levels the playing field for local merchants. Keeping the estate tax prevents us from going back to the feudal system.

Remember kings, queens, dukes, duchesses and various lords of the realm? One of the U.S. constitutionally mandated obligations of a citizen is to take a royal title only if Congress approves. Congress approves titles easily these days as the titles are of no real value beyond pomp. Fat estates, however, need to be cut down a bit to size.

An online tax helps Indiana merchants compete. Most Hoosier businesses already have online sales sites and pay their sales taxes into state coffers. Our buy-local mantras get a stiff kick when Amazon, eBay and other merchandizing organizations can immediately compete with local business with a fast 7-percent-plus discount. Why do we let them off?

Oh, I forgot that those Amazon, tax-skirting jobs are important for the state. Yes, they recently settled, except for the two years of millions of dollars in tax abatements that Amazon gets until they start taxing purchases in 2014.

We’ve been sliding down the slippery slope of tax abatements for a couple of decades now, with enormous and flashy failures.

Remember our friends at United Airlines? Recall the rich tax abatements if they’d service their fleet here in Indy? Remember how that worked out? A few have been advantageous, but more have exploded into our faces and sucked the budgets dry (unless we find another spare $300 million under another rock; should we start looking now?)

Yes, people can buy online and not pay sales tax. Part of the problem is nexus. The U.S. Constitution’s commerce clause allows people in Indiana to buy from elsewhere, outside of Indiana, ostensibly tax-exempt. It’s then a Hoosier’s duty to report those purchases and pay sales tax on them. Except no one does this. It’s unenforceable because Indiana can’t provoke other merchants to give them a list of what was purchased, by whom, when.

But we love those Amazon jobs. Did we give them property-tax exemptions, too? Do they have to pay fuel tax?

People already rail at having to pay Capital Improvement Board sales tax surcharges on restaurant purchases, and with good reason. We put scandalous amounts of revenue into the back pockets of the beneficiaries of our local stadiums and convention center facilities.

A level playing field for merchants strengthens them. Look in your neighborhood and count the closed businesses. Did they have a fighting chance?

We’re all happy about new jobs brought to Indiana, but at what eventual cost? What of struggling small businesses, trying to be parts of the community? I’ve yet to see an Amazon sign at a Little League playing field, or sponsoring the Girl Scouts.

Getting rid of the inheritance tax is a way to perpetuate wealth. Indiana needs a chunk of that wealth; it’s called civics.

I have no problem with parents working hard, and leaving something for their children and philanthropic ideals. Already, we exempt a huge sum of money from any tax at all. It’s the huge estate that can be taxed—if someone wasn’t wise enough to put their assets into a trust, whose contents are taxed by different rules—more like the corporate body that it is.

We have the Lilly legacies in Indianapolis that have done much for the community, just like the Glicks and the Clowes and many others. But these huge trusts and foundations aren’t the crux of new fiefdoms and principalities.

If you don’t knock some of the wealth down to a reasonable threshold, you’ll get just what many people ran away from: inherited earls and dukes preventing people from achieving what little is left of the American Dream.•

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Henderson is managing director of ExtremeLabs Inc., a Bloomington computer analysis firm.

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