DO YOU WANT MORE GOVERNMENT OR LESS GOVERNMENT?
While celebrating another national birthday this week, it would do us all well to pause for a moment and remember that our forefathers had a healthy distrust and fear of a government too big and invasive. As Gerald Ford put it some years ago, "A government big enough to give you everything is also big enough to take it away."
And now the Justice Department, fresh from its "victory" in its attempt to break up Microsoft, is moving on to the credit card industry. That's right, the Justice Department recently opened arguments in a Manhattan district court in a trial that could force major changes in the way Visa and MasterCard networks operate. The Justice Department filed the suit way back in October of '98, alleging that Visa USA and MasterCard International Inc. violated antitrust laws by limiting competition.
Visa and MasterCard have, of course, repeatedly denied the allegations, suggesting that American Express, which is not a party to the case but apparently will testify for the government, has been maneuvering behind the scenes to try to force change in the industry for its own benefit. Both Visa and MasterCard are set up through the nation's banking system; the two companies currently control about 75% of the credit card market. American Express owns about 17% of the action with Discover, while other cards control the balance.
As with any of these cases, it's hard to know who's right. Each party has high-priced lawyers in thousand-dollar suits, all arguing fine points that almost no one else understands. Just be assured that the American consumer will foot the bill. Certainly, we will foot the bill for the American Justice Department expenses, because that's our government, and, oh by the way, for Visa and MasterCard too, because obviously the expenses they incur will have to borne by someone, and my guess is they'll be borne by, you guessed it, we-the-people.
As long as we're touching on the banking industry, here's a somewhat related story concerning the popular, or infamous, depending on your point of view, ATM machines. There is a move afoot, believe it or not, to entertain you at the ATM machine during the half-minute or so that it takes to complete your transaction. For those who like to multi-task, Wells Fargo bank out of San Francisco has, it seems, created a souped-up ATM machine that will play movie trailers, news headlines and even stock quotes while you're waiting for your transactions to be completed. A spokesman for Wells Fargo says that someday, the machines may even allow some Web-surfing while you wait. The company is going to test four new machines, three in northern California and one in Los Angeles. It plans to roll out 800 by the end of this year in California and Arizona, and have 6,500 in 23 states by the end of next year. Who knows what's next? I guess its anybody's guess.
Last month the House voted to extend the ban on taxation of Internet purchases for another five years, but the measure still awaits Senate consideration, while the debate continues, states can take steps to influence the course of Internet transactions. Under the current law, states cannot require corporations without a substantial presence within their borders to collect and pay sales taxes. While all states do require residents to pay the taxes owed in the form of tax payments, few people send in the so-called "use forms," rendering remote sales essentially tax-free. The revenue lost due to lack of taxation on the Internet has been minimal so far, but states are concerned that the growth of the Internet will ultimately lead to a substantial drain of revenue. General sales taxes were one of the two largest sources of state revenue, other than income taxes, in the most recent year of payment. Of course, also a very complicated situation; no one can doubt that the Internet is growing by leaps and bounds, and purchases certainly are increasing, and admittedly that is taking revenue from states through a loss of sales tax. People keep denying that taxation of Internet transactions is coming, but all you have to do is look at the potential of lost revenue and use some common sense to know that within a year or two, another "free tax zone" will be eliminated.
(Tom Butenhoff is a First Vice President with J. E.
Liss & Company in Milwaukee. The views are his and not necessarily
those of Liss Financial Services or the Job Connection/Hiring
Network.)