Posted On: January 11, 2008, 1:28 pm CST

Posted By: MNE

The "taxpayer advocate" quoted in this article betrays their ignorance of microeconomics. If you graph supply and demand and then show the effect of a tax, you see that who is "responsible for paying" the tax is irrelevant. The burden falls on both the seller and the buyer; the effect of the tax is that the seller receives less money and the cost increases for the buyer. No seller can "pass on" a tax 100% to the consumer because the higher price caused by the tax results in fewer units sold.

In an economy which is more and more service-based, it is hard to make an argument to justify why services should be tax-free. The only argument worth making is the argument against sales taxes in general, which are socially regressive. (Taxes on income with higher rates for higher income brackets are progressive, as are wealth taxes and property taxes.)