ATTENTION, WEB MART SHOPPERS!

By Michael Kinsley

One of the small, illicit thrills of middle-class life is buying something by mail order and avoiding the sales tax. The mail-order houses had no idea how important this loophole is to their customers until last week, when they revealed an agreement to close it. Now they're backtracking like mad.

The loophole derives from an absurd anomaly of federalism: companies may refuse to collect taxes for states where they have no physical presence. In theory the customer pays the tax directly, but in practice almost nobody does.

States get half their revenue from the sales tax. Mail-order sales lose them an estimated $3.5 billion a year. If that doesn't break your heart, consider the unfairness to traditional stores, which must compete at a 4% or 6% or 8% government-imposed disadvantage.

And shopping across state lines is about to explode, thanks to the Internet. If you haven't yet bought anything online, you ought to and you probably will soon. It's fun and wonderfully efficient. The sales-tax loophole is gravy.

To lock in this advantage, Congress is considering something called the Internet Tax Freedom Act. The bill is sponsored by Democratic Senator Ron Wyden and Republican Congressman Chris Cox and backed by President Bill Clinton. Despite its characteristically cyber-self-righteous title, the bill would require only tax neutrality between the Internet and other channels of commerce. And it would only impose a multiyear "moratorium" (the length differs in the House and Senate versions) to prevent "chaos" while the issue is studied by a presidential commission.

But the practical effect would be to give Internet commerce several years of exemption from the sales tax whenever other mail-order methods are effectively exempt. By requiring neutrality between Internet commerce and other mail order, the bill effectively requires discrimination that favors Internet commerce over shopping at actual stores.

Moreover, one of the co-sponsors, Wyden, makes no bones about his hope that the ultimate result will be a tax-free Internet, as the bill's name suggests.

We'd all like to be tax free. Apart from its glamour (the same reason celebrities get good tables at fancy restaurants), why should the Internet enjoy this advantage? The usual answer is that there are 30,000 different taxing jurisdictions in the U.S., and the diffuse nature of cyberspace makes Internet commerce uniquely vulnerable to conflicting and overlapping tax claims. But the nightmare scenarios are nothing new. Ask General Motors or Federal Express if 50 states and thousands of counties and cities add up to a picnic for them. The mail-order houses used to insist, until last week, that collecting all these different sales taxes was logistically impossible. But that alleged problem seems to have disappeared. If anything, totally computerized cybercommerce should find it easier to handle such complexities. And the very nonmateriality of cyberspace should make it easier for Internet businesses to leave, or threaten to leave, jurisdictions that treat them badly.

And hey, what's all this enthusiasm about the central government in Washington telling states and localities what they can and cannot do? I thought we were against that sort of thing these days.

The Internet Tax Freedom Act is another example of Internet hubris. The Internet, to its most blindly enthusiastic partisans, is a thing apart: more glorious and yet more sensitive to ill winds than any mere earthly phenomenon. The normal rules do not and should not apply.

This attitude is revealed in two other controversies: the Communications Decency Act (the Internet censorship law overturned by the Supreme Court in June) and encryption (a still unresolved conflict concerning government efforts to stop the spread of uncrackable computerized secret codes). In both these cases, unlike in the tax issue, the Webbies are basically in the right. But their indignant absolutism, their refusal to recognize any valid concern on the other side, is obnoxious. Government is right to be concerned that criminals and foreign enemies will be harder to spy on. And parents are right to be worried about some of what the Internet gives their children easy access to. In both cases there was a previously settled trade-off between personal freedom and other values until the Internet came along and worsened the terms. Freedom suddenly costs more in terms of the competing values. I still side with freedom, but it's dishonest not to acknowledge that the price has gone up.

Internet hype is justified. (As editor of an online magazine, Slate.com I have a big stake in thinking so.) But Internet special pleading is not justified. The Net doesn't need and doesn't deserve exemption from the rules that apply to the rest of human endeavor.