Bond: Marketplace Fairness Act isn’t fair to small business

The Times’ decision to print Dan Casey’s latest column was unfortunate (“Drivers pay the bill if Congress fails to act,” Sept. 21). Casey is miffed that, in an attempt to pass the buck and avoid tough decisions, the Virginia General Assembly hid behind the possibility of congressional inaction on the Marketplace (Un)Fairness Act to dodge voting for higher gas taxes.

Now, because Congress (rightly) refuses to act, Casey is casting aspersions on Virginia’s own Bob Goodlatte. Did it ever cross Casey’s mind that Goodlatte’s refusal to move the MFA might be motivated by a desire to make good policy and to protect a small but thriving sector of Virginia’s economy? Here are five points to consider:

1. Small online retailers are a growing, valuable and taxpaying part of our economy; there are more than 400 with fewer than 50 employees just in Virginia. But if MFA were to become law, those e-retailers would be forced to serve as tax collectors for something like 9,6000 jurisdictions across the country. And if some state tax collector thinks a small e-retailer with just a handful of employees has miscalculated its tax bill, that company could be exposed to a raft of audits and lawsuits. For some retailers, these new regulatory burdens might be so great that they’d close their doors rather than try to pay the compliance costs; for others, out-of-control auditors might forcibly make that decision for them.

2. It isn’t fair. All of the above red tape would be in the name of “fairness” — but the patent unfairness of the proposal is easily unmasked. When buyers make a purchase from a brick-and-mortar store, no one asks those consumers where they live so that the proprietor can make sure sales tax can be remitted to a buyer’s jurisdiction. A proprietor simply applies the sales tax for the community in which the store is located. But when a consumer buys from an online retailer, that proprietor is saddled with the unfair burden of sending taxes (and audit risk) all over the country. Why one simple rule for brick and mortars, and a mountain of red tape for online sellers?

3. If you want to talk about support, ask taxpayers and consumers. Those, like Casey, who cite a list of self-interested retailers as supporters of MFA should instead poll consumers and taxpayers. They are not at all fond of the idea of setting tax collectors loose to roam the Internet, or for out-of-state tax collectors to harass Virginia businesses. In fact, a recent poll found that 68 percent of likely Virginia voters are opposed to proposals like MFA — meaning that Goodlatte, in opposing the bill, is actually on the side of Virginians.

4. It’s David vs. Goliath, and Goliath is out to kill. In his spiteful effort to avoid paying higher gas taxes, Casey’s not just pushing a proposal that would kill good Virginia jobs, he’s also abetting the efforts of the biggest retailers — the Walmarts and Amazons of the world — to use Congress as a cudgel against their competitors. For those behemoths, the burdens of the MFA — calculating, collecting and remitting sales taxes from the country’s 9,600 jurisdictions — is just the cost of doing business, and a cost they can easily afford. But the tradeoff for them, getting rid of some of their most innovative competitors, is worth whatever they’re paying in compliance costs.

In short, Judiciary Committe Chairman Goodlatte should be praised for standing up to deep-pocketed special interests, for protecting Virginia e-retailers and their employees, and for trying to pursue good policy that is fair to all. He’s right to oppose the Marketplace (Un)Fairness Act, and to instead seek solutions that truly create a level playing field — not one that benefits the biggest retailers at the expense of consumers and small businesses.

 

 

By Phil Bond

Bond is the Executive Director of the WE R HERE Coalition, a group of 13,000 small online retailers. He formerly served as U.S. undersecretary of commerce for technology.

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