Actually, if anyone ever needed an obvious illustration of how government overreach can damage an economy, they need look no further than the Colorado legislature's foolish attempt to wheedle a few extra bucks out of consumers via an Internet sales tax.
After legislation forcing online companies to collect sales tax passed, Amazon.com moved to protect its consumers and long-term interests by severing its ties with Colorado. Unfortunately, this meant closing its associates program, which involved an estimated 5,000 jobs.
Amazon's actions were not surprising, as it did the same in North Carolina and Rhode Island (a state, incidentally, which reportedly saw no additional revenue generated after passing a similar law taxing Internet sales).
"They've done nothing here but spit in our face," bristled Colorado Senate Majority Leader John Morse in a ludicrous rant on YouTube, wherein he went on to describe Amazon's actions as "such tyranny!"
1. Colorado spit in Amazon's face.
2. Amazon can't force anyone to buy their stuff. The State of Colorado can force people to do things.
3. The article goes on to say that if all 50 states did this, companies like Amazon (and any other company that sells over the internet--including eBay sellers?) would have to deal with over 8000 different tax computations.
4. Refusing to do business in your state isn't "tyranny".
This petty power-and-money grab cost Colorado 5,000 jobs. Rhode Island's experience shows that you don't always get increased revenue from increased taxes--thank you, Dr. Laffer.
Instead of looking at new things to tax, perhaps governments should cut as much as possible and then raise taxes, if need be, to make up any remaining difference. I think most people are practical and would accept that if they believed that no more of their money was being wasted or given away.