It’s true. In 2000, I debated Grover Norquist, The Lord of Darkness, himself, and got the better of him, thank you very much. The subject of the debate was whether Internet companies should collect sales tax.
It was a big legal and economic issue back then. Remember that America was smitten with Internet – mania driven by the irrational exuberance of stock speculation. Internet gurus were getting interviewed on TV and saying in all seriousness that the Internet was the most important invention since the wheel.
The Supreme Court had weighed in on this issue in Quill v. North Dakota (1992) before the Internet even existed and had ruled that under the Commerce Clause of the Constitution a state couldn’t require an out of state business to collect state sales tax. But back in 2000 there were a lot of brick and mortar businesses that had created related Internet sites but were still not collecting sales tax for online sales. Barnes and Noble had the chutzpah to argue that their Internet subsidiary, barnesandnoble.com, had no real relation to the physical stores. (They were totally separate entities, the BN spokesman said, that just happened to be owned by the same family, run by the same executives, and shared the same offices and warehouses. Sure.)
Of course the big enchilada, then as now, was Amazon.com. Amazon didn’t have physical stores . And they made sure to put their warehouses in states that didn’t collect sales tax. But they did have hundreds of thousands of affiliate programs in every state. Pretty much every PTA and church group signed up as affiliates and were actively soliciting orders for and receiving generous commissions from Amazon.
Amazon was putting out a lot of grandiose pronouncements to justify its practice, which in reality was simply a strategy to undercut competition. Sometimes Amazon described the Internet as a juggernaut that was “driving the new economy” and taxes would kill the goose that laid the golden egg. At other times they said that the Internet was a sort of frail bird that could be crushed if Internet commerce had to collect sales tax. I pondered how the Internet could be both a juggernaut and a frail bird simultaneously. Amazon also seemed utterly flummoxed about how they could possibly calculate the various sales tax rates that existed in different districts. This, from a company that knew the individual reading habits of 20,000,000 customers.
I got involved in the issue because I thought Cody’s was getting a raw deal. But as is often the case with me, I very quickly lost perspective and became obsessed with the issue. I pretty much came to know more about the subject than anyone in California. Leslie got very concerned that I was alienating all our friends by droning on about the details of tax policy till they were stupefied with boredom.
A number of businesses and trade associations got together to form The e-Fairness Coalition. The mission statement said that it represented small businesses nationwide. The American Booksellers Association was a member in good standing. But the real money for this operation was coming from the International Council of Shopping Centers and Walmart. Normally not my favorite people. But as they say in the Middle East, “The enemy of my enemy is my friend.”
They needed a spokesman and felt that probably the vice president of Walmart for tax issues would not be an effective voice. So they enlisted me. My first job was to show up at a debate before a large business group in Walnut Creek. I would be speaking in support of the principle of Internet sales tax collection. And the spokesman for the other side would be Grover Norquist.
Norquist was a pretty formidable figure even then. He was a little too intense for my taste. He hated all taxes and loved the Cayman Islands. And he was an early and passionate advocate for Internet sales tax evasion. I knew what his arguments were. The usual stuff that Amazon put out, the juggernaut driving the new economy, etc. He also ranted about how whenever liberals discover something cool, they just want to tax it.
It was pretty easy for me to refute these arguments. All I had to do was lay out the classic conservative economic nostrum that government should not be picking winners and losers. The free market should be picking winners and losers. I also pointed out the corollary, that tax policy should be based on the principle of a level playing field. It was an irrefutable argument politically, economically, morally.
I’d been listening to Norquist going around the country laying out his talking points. He said that people in California shouldn’t have to be subject to decisions by tax administrators in Alabama. I still have no idea what that meant except that it had something to do with states rights. But when I heard it, I sensed opportunity.
I knew he was going to bring it up in our debate. And I was ready for it. And of course he played right into my diabolical plan. As soon as he said it, I looked down at the podium, shaking my head with an expression more of sadness than anger. Then I looked up at the audience and very slowly said: “You know….that’s old argument…and not a pretty one…. In 1860…they said that to justify slavery…. A hundred years later….they said it again to defend segregation…. And now my friend here is using it to justify this discriminatory tax policy…
I have to say my timing and the cadence of my voice were perfect. Norquist went wild. He started screaming. It was terrifying to behold. I tried to breathe slowly and evenly to quiet my heart, to find my center. Norquist’s face turned red. Beads of perspiration started dripping down his cheek. A stench came off his body like the carcass of a rabid dog rotting at the gates of Hell. — Hmm. Maybe not quite.
