As states around the country continue to deal with budget deficits, many are looking for ways to raise revenues so that they don’t have to cut even deeper into crucial public services like education and health care.

One way states are looking to raise revenues is to close what has become known as the “Amazon Loophole.” Currently, online retailers like Amazon.com set up subsidiary corporations in states and then argue that the subsidiary corporation doesn’t obligate the parent company to collect sales taxes in that state.

Lawmakers in numerous states, like South Carolina, Texas, Tennessee, and others are tackling this loophole by mandating that Amazon customers in their states pay sales taxes, which would both provide revenue for their states and deny Amazon and other online retailers an unfair advantage over local retailers whose customers do have to pay sales taxes.

Responding to these legislators, Amazon CEO Jeff Bezos remarkably claimed today that state efforts to close the loophole and have Amazon behave like any other retailer are actually unconstitutional:

Now, Amazon CEO Jeff Bezos is saying that some U.S. states’ tax demands are violating the U.S. Constitution. [...] “First of all, most of where we do business – Europe, Japan, some of the states here in the United States – we collect sales tax. More than half our business,” said Bezos. “We do collect sales taxes, the European equivalent of value-added tax. And in the U.S., the Constitution prohibits states from interfering in interstate commerce. And there was a Supreme Court case decades ago that clarified that businesses – it was mail-order at the time because the internet did not exist – that mail-order companies could not be required to collect sales tax in states where they didn’t have what’s called ‘nexus.’”

Bezos is referring to a 1992 Supreme Court decision that said “that retailers who lack a physical presence in a state, or ‘nexus,’ cannot be required to collect tax.” Yet states aren’t claiming extraordinary powers to tax Amazon transactions. Rather, they are expanding the definition of “nexus” to “include affiliate programs, such as when Amazon pays a commission for links that result in sales.”

But the Amazon CEO should know that his constitutional argument is bunk. After all, his company lost a constitutional challenge to New York when it sued to stop that state’s efforts to close the Amazon loophole (Overstock.com lost a similar case). “Amazon should not be permitted to escape tax collection indirectly, through use of an incentivized New York sales force to generate revenue, when it would not be able to achieve tax avoidance directly through use of New York employees engaged in the very same activities,” said Judge Eileen Bransten.

It’s crucial that states are able to excise their powers of taxation to get revenue from transactions occuring within their territory, given that state governments are losing millions of dollars thanks to tax dodging by big online retailers. As just one example, in “2011 alone, Wisconsin will lose an estimated $127 million in uncollected sales tax on purchases made online.” Unfortunately, Amazon hasn’t reacted to these state efforts just by challenging them in court. When Texas tried to close its Amazon Loophole, the retailer announced that it would end all business there.

The Florida legislature moved earlier this month, with the support of Gov. Rick Scott (R), to cut its unemployment benefit system, even while its unemployment rate hovers above 11 percent and its median duration of unemployment hangs at 27 weeks. As the National Employment Law Project pointed out, with the legislation, Florida will “go further than any other state in dismantling its unemployment insurance system.”

The money Florida is saving is being put toward a corporate tax cut in a state where corporate taxes are already exceedingly low. And as CAP’s Heather Boushey and Danielle Lazarowitz noted, the cut could actually reduce the sunshine state’s economic growth:

Economist Wayne Vroman in a study for the Department of Labor estimates that for every dollar spent on unemployment benefits by the government, an additional $2 was put back into the economy. During the Great Recession, the regular unemployment insurance program — the exact program targeted in the Florida legislation — reduced the fall in the gross domestic product by 10.5 percent. Cutting unemployment benefits would remove a substantial amount of demand from Florida’s economy.

As people collect, and spend, their relatively meager unemployment benefits, that money ripples through the economy, supporting other workers and businesses. Taking that demand away leads to unnecessary drops in consumer spending. Boushey and Lazarowitz also note that cutting unemployment benefits could increase Florida’s poverty rate, as such benefits have kept more than 3 million people across the country out of poverty during the Great Recession.

Florida is far from the only state trying to cut unemployment benefits, even with long-term unemployment sky-high and job creation sluggish. Michigan and Utah have both cut their benefits, with lawmakers in Utah justifying their move by promoting the myth that unemployment benefits keep people from looking for work. As the Huffington Post’s Arthur Delaney reported, South Carolina is looking like the next state on the list, as its state senate approved a bill reducing state unemployment benefits from the national standard of 26 weeks to 20 weeks.

Politico today profiled the troubling growth in the number of “default deniers,” Republican Congressman who don’t believe, as most economists and analysts do, that failing to raise the nation’s debt ceiling will result in negative economic consequences. “The case has not been made that this is an absolute necessity,” said Rep. Bill Huizenga (R-MI), for instance. The U.S. officially hit its borrowing limit on Monday, but the Treasury Department can use various measures to stall default until August 2.

One of the leaders of the default deniers is Sen. Pat Toomey (R-PA), who authored a cockamamie bill that he claimed would prevent the U.S. from defaulting on its debt even if the ceiling weren’t raised. (Treasury called Toomey’s legislation “unworkable.”) Today, Toomey delivered a speech at the American Enterprise Institute where he claimed that failing to raise the debt ceiling wouldn’t have an adverse effect on the economy:

As I’ve said before, if we can get the things that I’m looking for, the spending cuts, the reforms in the process, I’m willing to vote to raise the debt limit because it is very disruptive. I don’t think it’s going to have an adverse impact on the economy for the days or weeks or perhaps even months that this would continue, I doubt that it would be that long, I doubt that it would be disruptive to the economy per se, but it would be disruptive certainly to the people who are accustomed to and relying on the programs that would necessarily be cut.

Watch it:

As former Reagan economic official Bruce Bartlett noted, “failure to raise the debt limit not only threatens a default that could potentially roil the entire world financial system, but would potentially deprive federal workers of their salaries, deny payments to businesses for goods and services sold to the federal government, renege on Social Security benefits to retirees, and shortchange savers who depend on interest income.” Bank of America analysts noted that not raising the debt ceiling “would necessitate politically unpopular and potentially economically crippling budget cuts that would likely push the U.S. into recession and drag down the stock market.” It would also make paying off the debt much more expensive (through higher interest rates). Those sure sound like adverse effects.

Former Minnesota Gov. Tim Pawlenty (R-MN) went a step further back in January, saying that failing to raise the debt limit would actually be good for the economy. These Republicans should check in with conservative icon Ronald Reagan, who in 1983 warned of “incalculable damage” to the economy if the debt limit wasn’t raised.