The Leaflet – The Amazon tax goes to Congress

Published December 1, 2011

I hope everyone had a fun- and food-filled Thanksgiving!

This week, I and a few other Heartland staffers are attending the American Legislative Exchange Council’s State’s and Nation’s Policy Summit in Scottsdale, Arizona. The event brings together state lawmakers from across the country to debate prospective model legislation and to learn about policy solutions being used in other states.

I had the privilege of co-chairing a working group at this event to discuss Internet sales taxes, also known as the Amazon tax. Yesterday, Congress stepped into the fray by beginning to hold hearings on various Internet sales tax hike proposals. Until now the debate had taken place primarily in the states. The crux of the issue centers on the Supreme Court’s 1992 decision in Quill Corp. v. North Dakota, which decided companies are required to collect sales tax only where they maintain a physical nexus.

The tax hike proposals being debated in Congress and in the states raise three fundamental questions. First, is tax competition among the states hindered by these proposals? Second, do these agreements undercut federalism? And third, will such agreements increase the tax burden on consumers? I believe the answer to each of these questions is yes. One alternative that could alleviate these problems is to move away from destination-based taxation of Internet sales to a revenue-neutral origin-based approach. If you have any questions about this issue or would like more information please let me know.

This week’s edition of The Leaflet features research and commentary addressing charter schools, Climategate 2.0, insurance exchanges, college loan bailouts, the Protect IP Act, and Cook County’s budget.


John Nothdurft
Director – Government Relations


Lead Story

Research & Commentary: Charter Schools and Incentives for Academic Success

Approximately 5 percent of U.S. schoolchildren attend public charter schools, and several states including Michigan and Wisconsin are considering legislation to lift or remove caps on charter school growth. Although 40 states and the District of Columbia have enacted laws allowing charter schools, an analysis by the Center for Education Reform found 29 of these states have laws that impede charter growth and innovation.

Teacher unions and local school boards often claim charter schools siphon funding and smart students away from already-struggling public schools. They also contend expanding charters amounts to corporatizing public schools, since many charter schools are run by private companies or foundations.

Charter school advocates reply that every institution has a deep-seated incentive to increase its reach and profits, and calling an enterprise public often masks that reality. It’s better to take this reality into account and align school incentives with student interests, instead of special interests, by tying education money to individual children and giving families access to a wide variety of education options, such as those charter schools afford. Schools then would have to demonstrate their value to receive tuition, rather than getting it automatically.

These advocates also note charter schools have a better track record of increasing student achievement, and inadequate charter schools are more easily and more often closed than public schools. Taxpayers should not be forced to prop up, and children forced to attend, any school unable to prove its worth consistently.


What We’re Working On 

Climategate 2.0: New E-Mails Rock the Global Warming Debate

Heartland Senior Fellow James M. Taylor discusses the recent release of emails among scientists central to the assertion that humans are causing a global warming crisis. He finds (1) prominent scientists central to the global warming debate are taking measures to conceal rather than disseminate underlying data and discussions; (2) these scientists view global warming as a political “cause” rather than a matter for careful scientific inquiry; and (3) many of these scientists frankly admit to each other that much of the science is weak and dependent on deliberate manipulation of facts and data.

Health Insurance Exchanges and Unfounded Concerns (Kendall Antekeier and Rep. Nate Bell Commentary)
Health Care

This month, Legislative Specialist Kendall Antekeier and Arkansas state Rep. Nate Bell (R-22) co-authored a commentary on health insurance exchanges and why Arkansas should resist. The same arguments are valid for states nationwide. The article was published in Arkansas Business.

Obama’s College Loan Initiative Another Bailout for the Privileged
Finance, Insurance and Real Estate

President Barack Obama’s recent decision to effectively bail out U.S. college certificate-holders by making it easier for them to avoid fully repaying their federal student loans has sparked rising anger in some quarters.

George Leef, director of research at The Pope Center for Higher Education Policy, said Obama’s student loan bailout plan is unfair because it forces all Americans to rescue a privileged coterie. Potential bailout beneficiaries constitute less than 30 percent of the U.S. population, and their college certificates (including degrees) grant them entry to jobs Americans lacking college credentials may not hold even if they could otherwise do the work.

For instance, U.S. Army nurses returning from duty in Iraq are prohibited from training to become doctors or even physical therapists if they lack a college certificate. Furthermore, the certificate need not be in the person’s chosen field. A degree in world communications, for instance, could qualify the Army nurse to train to become a doctor.

VIDEO: PROTECT-IP/Stop Online Piracy Act Gives Government Too Much Power

According to the Congressional Budget Office, the PROTECT-IP/Stop Online Piracy Act (PIPA/SOPA) bill currently gaining momentum in Congress will cost taxpayers $47 million a year. In this video from Fight for the Future, other major drawbacks beyond costs of PIPA/SOPA are enumerated, including empowering government and corporations with the ability to censor the Internet under the guise of protecting creative works.

Short-term Fixes Won’t End Cook County Woes
Budget & Tax

John Nothdurft, in an oped published in Crain’s Chicago Business, criticizes Cook County President Toni Preckwinkle for her recent $2.94 billion budget, which passed 16–1. The budget wrongly focused on reducing short-term expenditures and increasing highly regressive taxes on alcohol, tobacco, and parking instead of substantive reforms to reduce long-term expenditures.



Heartland Author Series: Phil Kerpen

516 North Clark Street
Chicago, IL 60654
Thursday, December 8, 2011, 11:30 AM

Policy Newspaper

Budget & Tax News

The December issue of Budget & Tax News reports the U.S. Senate Appropriations Committee has ended rail boosters’ hopes of getting a meaningful appropriation for high-speed rail in FY 2012, likely a decisive blow to President Barack Obama’s goal of “giving 80 percent of Americans access to high-speed rail.”


Quick Hits

Letter from Washington: Chicago as America’s True Insurance Capital

Greens vs. Science: Ignorance Trumps Evidence In Ecology’s Approach to “Toxics”