Opinion - Chaffetz Bill would set reckless new precedent

Opinion: Chaffetz Bill Would Set Reckless New Precedent

Remote Transactions Parity Act Gives States Sweeping New Powers

In a 1789 letter to a French scientist, Benjamin Franklin summed up the direction American government had taken in a single phrase: “nothing is certain except death and taxes.” Still true today, Franklin’s statement needs to be amended to reflect the reality that, not only are taxes an unfortunate certainty, but so is the certainty that the tax collector will follow you wherever you go, whatever you do, to levy those taxes and hold you responsible. Ask any American multinational corporation…the long arm of the IRS today extends far beyond our borders.

That’s not a good distinction and this fact makes the USA less competitive globally and a less desirable country in which to locate facilities and do business.

Here at home, states have long competed with one another to attract business by providing incentives of all kinds from loans to tax exemptions and beyond. But one thing states haven’t done is follow their residents’ buying habits and levy taxes on them, wherever those purchases are made. Now, with the Rep. Jason Chaffetz’s Remote Transactions Parity Act, they’ll do just that.

Rep. Chaffetz, a Utah Republican, has essentially reintroduced the Marketplace Fairness Act, a bill that died last year under opposition from thousands of small web-enabled retailers and their customers. They objected then, as they do now, to provisions of the legislation that would target small online retailers, and force them to collect sales taxes based not on where the retailer is located, but on where the customer lives. This introduces massively multiplied audit risk for the smallest of companies – those employing even a couple of people. The proposed bill represents a massive new accounting mandate, the bill would place substantial burdens on small online retailers, stifling growth and reducing incentives for entrepreneurs to start or expand their businesses.

It’s an ill-timed hit to economic growth, and a hit to the job creation for which small businesses are the driving force.

But perhaps most disturbing is that Rep. Chaffetz’s bill would allow states to track the activities of their citizens, gain knowledge about their personal spending decisions by forcing retailers to provide the information, and then impose taxes on them. Any slip-up in the bookkeeping could result in close scrutiny by the state of individual taxpayers’ finances. Audits and fines, or the constant threat of them, could drive thousands of small companies into bankruptcy.

It’s a chilling reality that will not only harm small online retailers by imposing new costs and regulations on them, but it also has the potential to have a dampening effect on internet retail sales as customers come to understand the added costs and risks from new government oversight into their personal finances.

It’s puzzling that, barely a year after voters handed Republicans their biggest house majority since the Truman administration, Rep. Chaffetz would be moving to get more money out of consumers’ wallets while also greatly expanding government reach into private lives. It would be hard to find an exit poll showing that was the action voters wanted in response to their support last November.

Rep. Chaffetz’s bill, supported by mega retailers Wal Mart and Amazon, is a thinly veiled effort to quash online competitors before they grow into serious competition. Killing small online retailers through regulation, and killing their customer base by raising costs and privacy concerns is a step towards further concentration of retailing in America into the hands of fewer and fewer mega sellers.

That’s bad for consumers, bad for job creation, and bad for the long-term balanced growth of our economy.

The American people should know that the Chaffetz bill is a tool of the big box mega retailers who fear the growth of web-enabled retailing because they don’t understand it, and in many cases can’t compete against it. In the spirit of openness and transparency, perhaps Rep. Chaffetz should rename his bill to better reflect its real impact in practice. He should call it what it really is: “The Relentless Taxation Act of 2015.”


As read on Inside Sources.