Molly Ivins November 13

IOWA CITY, Iowa — Where the land is not all that flat, the people are lovely and drinking the water is not a good idea. Being back in the Land of Sensible People — to wit, the Midwest — encourages me to do something that any nickel-and-dime cynic would sneer at: ask people to think specifically about the public vs. the private interest, about selfishness and fairness in a most mundane context.

It's the Great Catalogue Stand-Off. Lots of people in this country, including me, spend a fair amount of time blaming other people for our problems. If this group of that party or this special interest or any Other that pops up would just behave better, what a wonderful world it would be. Now I find myself in the midst of a group of people behaving badly. Fellow Catalog Shoppers, you should be ashamed of yourselves. And you Internet users, too.

The problem is simple: People who shop through catalogs don't pay sales taxes; a catalog company in Maine has no reason to collect sales taxes for the state of Texas. Catalog companies have always argued that keeping track of the sales taxes in 50 different states and who knows how many local taxing districts is just too complicated — an unfair burden on their bidness. But then along came computers, and with your handy-dandy sales-tax software, voila, you can figure out what's owed where in a flash. Hard to argue with that, right? Wrong. The computer industry itself is arguing most piteously that it, too, should be exempt from sales taxes.

In the continuing vogue for giving misleading titles to legislation, now comes the Internet Tax Freedom Act. Makes it sound like someone's about to tax the Internet. Nope, just trying to extend to the Internet this same tax loophole that the catalogue companies have been enjoying. Order from the Internet — pay no sales tax.

What is it about buying from Land's End that makes someone superior to those who buy at Kmart? Why should the people who buy their garden implements from the local hardware store have to pay sales taxes while those who order from those elegant garden catalogues don't?

Because this inequity is so glaring, the catalogue companies finally agreed to close this tax loophole — only to find their customers up in arms. "Well," said one indignant woman interviewed by CNN, "if I have to pay sales taxes and delivery charges, I'll just go to the store." Imagine that.

Such an imposition, being asked to pay the same taxes everyone pays! Asked to pay up with everyone else, catalogue shoppers have reacted like so many Leona Helmsleys: Taxes are for little people.

The sales tax, which is a regressive tax to begin with, accounts for about one-half of the budget of most cities. So what happens when we exempt catalogue and Internet sales? Your neighbors who go to local stores, who support the local businesses that keep the local economy going, those neighbors wind up paying an unfair proportion of the taxes that pay for your fire and police protection, garbage pickup, pothole-filling, public libraries, etc., etc.

Someone is behaving badly here, and it looks to me like it's us. As for the notion of extending this unfair tax loophole to the Internet, why? Internet users are, and will continue to be for at least quite some time to come, an elite minority. Why should they be given a break on the sales tax?

Those of you who are not catalog shoppers will want to take notes on this phenomenon. What happens when you take away an unfair privilege? Those who are accustomed to it react as though they are being treated unfairly, no matter how clear it is that they have been given unfair advantages. Keep this pattern of human behavior in mind; you will see it again and may even recognize it in yourself sometime.

As we allow Congress to build more and more unfair advantages into the tax code, think of the yowling, hissing and spitting that will go on when we finally try to remove them. We should stop letting people buy special privileges with campaign contributions now, just for the purpose of future noise abatement. Let's see — we could start with the Internet Tax Freedom Act, which is being greased along, of course, by generous campaign contributions from the friendly folks in the cyber industry.

Now, here's an interesting factoid, courtesy of that valuable fellow Nicholas Johnson, former head of the Federal Communications Commission. Johnson has been keeping track of the payoff on campaign contributions from big special interests, and he reports that it averages out to a spectacular 2,000-to-1 return on investment. He reports that he has found cases in which the return sinks as low as 1,000-to-1, but those are exceptional.

In other words, when a major special interest — say, a pharmaceutical or chemical company — invests $1 million in campaign contributions, it is practically guaranteed special tax treatment or trade advantages worth an average of $2 billion. You talk about return on investment: Why put money into plant, equipment or labor when you can earn so much more by investing in campaign financing?

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Molly Ivins is a columnist for the Fort Worth Star-Telegram.

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