The Marketplace Fairness Act or Internet Sales Tax bill is taxation without representation since the Internet can’t protest or vote. It passed in the Senate on a bipartisan vote of 69-27 this week. The bill requires Internet businesses to tax every customer in every state. Prior to this, Internet businesses only had to collect taxes in the states they have a physical presence in, such as a warehouse, office, showroom or brick-and-mortar store.
The bill is heading for the House. I assume the Republicans who vote for this don’t plan on winning re-election.
The brick & mortar businesses and Walmart want the tax because they say it will level the playing field since they have to collect taxes. People sometimes avoid taxes by buying on the Internet and brick & mortar claim they are losing business because of it. The convenience of the Internet is probably more of a problem for brick & mortar.
Shipping from Internet stores is expensive and more than makes up for any advantage they might have in sales tax. Now items bought on the Internet will cost sales taxes and shipping. That should do more than level the playing field, it will level the Internet stores.
The Internet was a way for everyone to enter the small business market. Online stores have had fewer regulations and red tape. It was a good way for businesses to test the water with a new product. We can’t have that!
The bureaucratic cost of this bill alone is nightmarish.
This law opens the door to small business being subject to audits by any state the business sells an item in. It is ultimately unfair to Internet stores who will have to tax in every state while brick & mortar will only have to tax the state they are in.
If the Fairness Act were truly fair, the sales tax would be eliminated. If you remember, the sales tax in most states was levied as a “temporary” measure. Government officials talk about our money as if it were theirs. Our politicians think they are entitled to our money and the fruits of our labor.
The greed of companies like Walmart is helping fuel this. They will eliminate a lot of competition with this bill.
No tax on the American people is a good tax and it is not up to our government to level the playing field with taxes.
It is an open door to more Internet taxes and it harms small business. Many brick & mortar businesses have online stores. This is more about Walmart, Internet taxes and overreaching politicians than it is about fairness.
The state governments have already spent the money. Virginia for example wants to use it for transportation so they don’t have to raise gasoline prices to increase their revenue, which they didn’t earn in the first place.
If the government wanted to spur sales, all they’d have to do is lower or eliminate the sales tax.
Read all about it at the NY Times