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Business Costs & Regulation

Should Online Retailers Collect Sales Taxes?

To me, the fundamental principle of ethical taxation is equal treatment of similar transactions.

Q: I am a small-town retailer. It rankles me that I have to add my state’s 5% sales tax to every sale I make, but national online retailers who have no physical presence in this state don’t have to collect tax from their customers who live in our community. So they can undercut my prices by that amount and deprive our state of badly needed revenue at the same time. Is this ethical?

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No, and a lot of states are trying to fix the situation. To me, the fundamental principle of ethical taxation is equal treatment of similar transactions.

As I see it, the controlling factor here should be where the buyer lives and where the merchandise is delivered, not where the retailer is located.

Q: The college where I teach seems to be allowing big donors of endowed chairs to have a voice in choosing the professors who will hold those chairs. This strikes me as a violation of the faculty’s academic freedom. What do you think?

At the most ethical institutions, donors are clearly told—and willingly accept—that the appointment of endowed professorships lies entirely with the academic leadership of the college. But donors have a right to expect that the holder of a chair they endow will not be antagonistic to the purposes they sought to further through their gift.

In an extreme example, the funder of a program in labor relations would have a legitimate grievance if the college named a prominent anti-union lawyer to the directorship, even if she were highly knowledgeable in labor law.

Similarly, a donor would be justly concerned if a college named a Marxist professor to a chair he endowed for the impartial study of free-market economics. If the purpose of the endowment is understood by all, then there need not be (and shouldn’t be) any further involvement by the donor.

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