John Tate Tells Senators: There’s Nothing Fair About an Internet Sales Tax
Last week, C4L President John Tate sent a letter to Senators urging them to oppose S. 336, the so-called “Marketplace Fairness Act,” or as C4L refers to it, the “Internet Sales Tax Mandate.”
On behalf of over half a million Campaign for Liberty grassroots activists across the country, I urge you to oppose S. 336, the misnamed “Marketplace Fairness Act.”
The false premise behind this legislation is that current law gives online retailers an unfair competitive advantage. However, both traditional “brick and mortar” stores and online retailers have entered into the marketplace clearly knowing the pros and cons to the business model for each. Since the 1992 Supreme Court decision in Quill Corp. v. North Dakota, the rules regarding taxation for both business models have been quite clear. Businesses that do not have a “physical presence” in a state cannot be forced to collect that state’s sales tax.
The bill sponsors try to claim the Quill decision unfairly gives an advantage to online retailers. That is simply not the case.
Instead, this is another example of politicians creating a problem where none exists so they can “solve” it with new legislation.
The rapid growth of the online retail industry can at least be partially attributed to consumers’ ability to shop online without paying exorbitant state sales taxes. While consumers themselves are responsible for paying sales taxes for online purchases in some states, most consumers are unaware of this. The real reason for legislation such as the so-called “Marketplace Fairness Act” is that big-spending governors don’t think it’s “fair” they can’t force out-of-state retailers to collect their taxes for them.
While some governors may think imposing new taxes on the Internet will solve their economic woes, in reality, it will only temporarily postpone the urgency for states like California to put their fiscal houses in order.
For years, the largest online retailer of them all, Amazon.com, opposed an Internet sales tax. Unfortunately, since they’ve become large enough to have a physical presence in many states, they’ve switched sides and hired lobbyists to impose a sales tax on their competitors that lack a national infrastructure.
While companies as large as Amazon could easily absorb the cost of complying with an Internet sales tax, smaller online retailers will likely find the cost of compliance too high and be driven out of business. Legislation like S. 336 may well prevent the emergence of the next great American success story.
Again, on behalf of Campaign for Liberty’s members, I urge you to keep the Internet free from further government intrusion and harmful taxation by opposing S. 336, the misnamed “Marketplace Fairness Act.”