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Imagine yourself entering a shopping mall: you walk into a store, select an item that you like and head to the counter. It doesn’t matter whether you came to the store from across the street or from Oshkosh, Wisconsin, the cashier simply charges you for your purchase and includes the local sales tax rate.
Michelle Steel
If the cashier were instead required to ask for each customer’s home address and charge sales tax at that rate, he could be faced with more than 9,500 different sales tax jurisdictions in 45 states, plus Washington, D.C. The storeowner would be forced to comply with each state’s complex sales tax rules, wasting precious time and money that could be better spent running her business.
If such a system were proposed, brick-and-mortar retailers would be outraged. No politicians could support such a plan because the local businesses that they rely on for support would turn against them in a flash. Yet that’s exactly what the federal government has in store for Internet retailers, if the U.S. House of Representatives follows the Senate in passing the “Marketplace Fairness Act of 2013.”
The act – which is inherently unfair – claims to “restore States’ sovereign rights to enforce sales and use tax laws,” but it would do nothing of the sort. Instead, it would force Internet retailers to comply with thousands of different sales tax rules in dozens of states in which they have no vote and no political recourse. In other words, it would allow for taxation without representation.
The goal of this act is to help states capture tax dollars they lose when citizens vote with their web browsers by choosing to shop online. Now that shopping out of state is as easy as a few clicks on a keyboard, and revenue is short compared to the amount of spending politicians want, those politicians are clamoring over every penny they can get from out-of-state purchases. And the federal government is rushing to enact what it sees as the only solution.
But violating a basic principle of American liberty is not a solution.
While proponents of this act, and others like it, claim that it will “level the playing field,” it will in fact put Internet retailers at a severe disadvantage when compared with brick-and-mortar stores. That’s because retailers with physical locations within a state, regardless of how many locations they have in how many states, are only required to collect one tax rate at each location. If they sell items online, they are only required to collect sales taxes in the states in which they operate.
Under the Marketplace Fairness Act, Internet retailers would be forced to collect sales taxes in states where they have no presence whatever. Without any local knowledge or assistance, they would have to figure out which of their items are taxable in which of the thousands of state and local tax jurisdictions. They could face dozens of audits per year from taxing states. And all of this without an elected representative to turn to for help in likely case that a problem should arise.
Finally, the legal and accounting costs faced by smaller online retailers – and even some of the large ones – would be difficult to absorb, leading some to raise prices, and others to close their online operations altogether, reducing the value of what has become one of the greatest resources in the 21st Century: the online market place.
I urge the House of Representatives to reject this oppressive act.