Heartland Institute Experts Comment on
Introduction of ‘Marketplace Fairness Act’
U.S. Sens. Mike Enzi (R-WY), Dick Durbin (D-IL), and Lamar Alexander (R-TN) today introduced the Marketplace Fairness Act, a bill that would give states the option to collect sales taxes on Web-based businesses that are headquartered outside their state borders.
The following statements from tax and technology experts at The Heartland Institute – a free-market think tank – may be used for attribution. For more comments, refer to the contact information below. To book a Heartland guest on your program, please contact Director of Communications Jim Lakely at [email protected] and 312/377-4000 or (cell) 312/731-9364.
“The so-called Marketplace Fairness Act is anything but fair for the marketplace. Giving states a new open-ended power to tax out-of-state residents regardless of physical presence would be a disaster for consumers. Bricks-and-mortar retailers enjoy many basic advantages over other retailers. Driving up the cost for purchases made online or by mail-order will hinder competition and open taxpayers up to a whole new slew of possible taxes.”
“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.
“The desire to make things easier for government tax collectors is an outrageous rationale for what amounts to another unnecessary and unjust tax hike.”
“The Marketplace Fairness Act is problematic for several reasons. First, while supporters argue that these taxes are needed to restore a balance between online and bricks-and-mortar retailers, it is merely one powerful group (retailers) using the government to hinder a competitor. The proposed legislation would undermine tax competition and place a new burden on many businesses, especially small online retailers, slowing the growth of the e-commerce industry, which has been one of the few sectors still experiencing economic growth.
“Second, the Marketplace Fairness Act would remove the physical presence standard, which is intended to ensure that taxpayers are not required to pay a tax to a government with whom they have no political voice and from whom they receive no government benefits or services. Imposing these new taxes could present a worrisome first step in what could become a dramatic expansion of state taxing powers.”
“Such proposed taxes travel under the guise of ‘fairness’ when they’re nothing more than a grab for stashing more dollars in government coffers. It’s beyond comprehension how a tax that will kill jobs by driving up the cost of doing business in order to collect them is in the interest of fairness for bricks-and-mortar retailers.
“What’s left out of the zero-sum equation of proposed ‘fairness’ legislation is the diversity of the clientele respectively served by online and bricks-and-mortar stores – the customers who would wind up either paying more out-of-pocket for online purchases may opt to forgo the purchase altogether until they find the item they desire at a garage or estate sale. Then what? A new tax that promises ‘fairness’ for both Internet and bricks-and-mortars businesses by taxing the second-hand market?”
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