The Marketplace Fairness Act is Internet Revenge
By: David Heacock
While many Americans are opposed to any new tax increases, slip them a proposal in the name of “fairness” and they’ll be quick to join your side. The so-called Marketplace Fairness Act is proving this to be the case, even in a time of economic sluggishness with a rising cost of living. After all, who could be against safeguarding local brick and mortar businesses from aggressive, national corporations?
But the major backers of this bill are major retailers such as Amazon, Wal-Mart, and Home Depot. Do we really believe these companies have a vested interest in the success of local, small businesses around the country, or is this bill really another example of corporate welfare for big business? If you move beyond the “fairness” hyperbole espoused by its proponents and assess its features, I believe the latter becomes evident.
At a glance, many see the bill as a common equalizer, but really it should be seen as a new tax on internet purchases for all Americans. As Campaign for Liberty calls it, it’s the “National Internet Tax Mandate.” Far from benefiting small businesses, the bill would place a huge regulatory burden on those who rely on internet sales for their revenues while passing the new costs onto customers. Combined with the expenses associated with additional accounting measures, this bill could increase the cost of internet purchases by as much as ten percent.
Bill sponsor Sen. Michael Enzi has cited an issue over states’ rights, in that states should have the right to collect taxes from their citizens when they purchase over the internet. But the reality is the Internet Tax Mandate sets a disturbing new precedent by giving states the power to tax businesses outside of their borders. It would not be their residents, but businesses across the country that would be responsible for paying each state what they’ve accrued in taxes. In other words, this is a scenario reeking of taxation without representation.
The Supreme Court addressed this exact issue in 1992 with Quill Corp v. North Dakota, where it decided Quill could not be taxed for selling products to North Dakota businesses since it owned no property in the state. The Senate is set to overrule the Supreme Court decision with a vote this week. With the Senate having invoked cloture, it has become obvious that our lawmakers are committed to both raising government revenues and retaining their corporate ties.
The internet’s tax-free, and minimally regulated, existence has provided an avenue for entrepreneurs to easily share their ideas and reach new customers for over two decades. Limiting the rewards associated with doing business online would discourage the development of future Amazon.com’s and eBay’s. If lawmakers really wanted to help out small businesses, they would cut back on the regulations that cause them to be less productive and lower their tax rates. Instead, the best they can come up with is to take revenge on the internet for daring to allow some revenue to slip from the grasping claws of the political class.