Cash-Grab ‘Marketplace Fairness Act’ Fails to Live Up to its Name

By Drex Davis
 
A triumvirate composed of cash-hungry state legislatures, “Big Retail” led by Walmart and Amazon, and sales tax software providers have coalesced around support for the Marketplace Fairness Act (MFA) and have small online retailers in their crosshairs.

The MFA would compel small online sellers like me to become unpaid tax collectors for states where we have no physical presence, no representation, and no voting rights.

It imposes huge compliance costs on us and makes us vulnerable to expensive and time-consuming tax audits from 46 states, six territories, and over 500 Native American Tribal Nations.

State governments say that if the MFA passes they’ll collect an additional $23 billion in revenue. The truth is that most of that $23 billion is already collected.

According to James Gilmore III, the former Chairman of the Congressional Advisory Commission on Electronic Commerce, 83 percent of online sales are made by big box retailers, and, therefore, collecting tax. Moreover, the remaining 17 percent of those online sales (less than 1 percent of total retail sales) are taxed through state use taxes, but the states usually choose to not collect them.

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