Georgia’s Proposed “Voluntary” Tax

April 2, 2010

Yesterday I wrote in the Daily Caller about taxes, fees, and a “voluntary tax” proposal in Georgia:

Georgia, like all states, cannot force out-of-state companies to collect sales taxes on sales into the state. For instance, online retailer has no property or employees in Georgia, so Georgia cannot force the company to collect sales taxes on its sales in the state.[…]

The Senate bill permits revenue officials to “employ contractors” to collect the taxes, “compensated only on a commission or contingent fee basis.” The Atlanta Journal-Constitution says proponents think it might raise as much as $30 million for the state’s budget.

I’m skeptical. If these vaguely defined “contractors” are the retailers themselves, it’s a matter of how much you have to pay a retailer to spend his time collecting taxes instead of retailing. If the contractors turn out to be private tax collectors, Georgia will run into serious problems with oversight and scope of authority. A similar tax collection program at the federal level using private contractors to collect allegedly unpaid taxes was shut down after serious incidents of abuse and harassment. The use of contingency fee lawyers to collect disputed hotel taxes in California is being challenged.

Also, $30 million isn’t a small sum of money. The federal government has an office in West Virginia where one can mail voluntary donations to reduce the federal debt. They’re even tax-deductible. Between 1982 and 2005, the feds have received 16,122 contributions totaling $9.8 million. If Georgia is really expecting to get three times that amount in just one year in just one state, it may not be as “voluntary” as the box at the museum.

See the full commentary here.

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