Blog: What Others are Saying about the Reintroduced Marketplace Fairness Act
We have gathered just a few of our friends who oppose the Marketplace Fairness Act. They understand how it will paralyze small online retailers and hurt economic expansion. Together, we hope to defeat this unfair legislation in 2013.
Long opposed to MFA-style legislation, the National Taxpayers Union dismisses the Internet tax collection bill as a reckless claim to address “tax fairness.” In a statement released by NTU, Executive Vice President Pete Sepp points out, “Despite some tweaks to the version introduced in the previous Congress, the latest proposal will also undermine tax competition among the states, tilt the commercial playing field in favor of big-box stores, and upend the constitutionally based doctrine of physical presence that has shielded sellers and buyers from out-of-state tax collectors reaching into their pockets.” In response to the re-introduced legislation, NTU launched a new effort to raise awareness of myths and facts surrounding the issues at stake. Check out WE R HERE’s myth vs. facts under “The Issue” section on the website.
In seeking to address the failures of the “use tax” systems employed by states, the R Street Institute’s statement criticizes the MFA legislation for enabling a massive expansion in state tax collection authority, ignoring taxpayer protection through an origin-based system – essentially, one based on physical presence, and creating damaging interstate commerce and compliance burdens for web enabled retailers.
Legislation like the MFA is an attempt to pass what is effectively taxation without representation. On The Heartland Institute’s website, experts commented on the reintroduction of the MFA. Director of Research, S.T Karnick notes, “Local merchants get roads built to their doors. They get utilities delivered over money-saving public rights of way. They get police, fire, accident, and disaster protection. The states give them all this and much more, and they charge them taxes to pay for it. Out-of-state retailers get ... nothing. But Congress thinks it’s ‘fair’ and ‘equitable’ to force them to collect taxes for the privilege of shipping things to people in these states.” This legislation does not keep the tax man in check, and sets a dangerous precedent for the 50 states to tax beyond their borders.
The world's largest online marketplace, eBay Inc., released a statement by Tod Cohen, Vice President and Deputy General Council of Global Government Relations that chastised the reintroduction of the MFA. “Small business retailers using the Internet are innovators using technology to grow a business, create jobs in local communities, and serve consumers with competitive alternatives. Congress should reject any Internet sales tax legislation that throws a new tax barrier in front of small businesses. A meaningful small business exemption that protects all small business retailers is a must.”
The Direct Marketing Association expressed disappointment with the Marketplace Fairness Act of 2013, “which purports to simplify the American sales tax system, [but] actually expands it.”
The Competitive Enterprise Institute warns the MFA legislation is a lot of pain for very little gain. Jessica Melugin, adjunct analyst at CEI, talks about the tenacity of this bill to promote “fairness.” “Projected revenues from expanded online sales taxes are less than one percent of total state and local revenues…There are ways to make sales tax law more equitable, but this isn’t one of them…This is an effort pushed by big retailers.”
Netchoice went with a very appropriate Valentine's Day themed response to the legislation introduction, noting, "Bite into any of the promised simplifications in this bill, and you’ll be awfully disappointed.” One adjustment to the previous MFA bill is an increase of a small business exemption from $500,000 to $1 million. However, that isn’t even enough to cover a mom-and-pop retail operation. Netchoice points out that in fact, the states’ own studies showed that retailers with under $1 million in sales already spend seventeen cents for every tax dollar they collect for states.