Rep. Jason Chaffetz (R-UT) is reviving a version of the failed Marketplace Fairness Act (MFA), a bill that would have provided state governments the authority to tax consumers outside of their political jurisdictions by applying sales taxes to purchases made online.
The Heartland Institute has joined 18 other organizations urging lawmakers to oppose Chaffetz’s Remote Transaction Parity Act (RTPA) and instead to promote pro-growth tax policies that make sense in the 21st century.
Taxation Without Representation
Douglas Kellogg, communications manager for the National Taxpayers Union, says RTPA is little different from MFA.
“RTPA [has many of] the big problems that the MFA had,” Kellogg said. “Specifically, giving states the power to reach outside their borders and collect taxes from people who don’t live there and
“Rather than taking on the responsibility of collecting use taxes from their own voters, they’d rather use the federal government to force out-of-state businesses to do their dirty work for them and place an unprecedented burden of complying with nearly 10,000 taxing jurisdictions …” Kellogg said.
Jessica Melugin, an adjunct fellow with the Competitive Enterprise Institute, says RTPA is even more flawed than MFA.
“RTPA is ‘MFA 2.0,'” Melugin said. “The destination-based tax model for online remote sellers that’s in both the MFA and the RTPA is clearly discriminatory, which is when traditional sales continue to be taxed based upon the point of sale.”
Instead of taxing sales based on where buyers live, Melugin says a different approach is needed.
“A better solution to the inequities in how sales taxes are applied is an origin-based approach,” said Melugin. “[All] remote sales, [regardless of whether they take place] online, from a catalogue, by phone, or whatever we think of next, are taxed … at the seller’s primary point of business and remitted to that tax jurisdiction. It protects competitive federalism and keeps taxing authorities accountable to those they tax.”
Matt Hurley ([email protected]) writes from Cincinnati, Ohio.
“An Open Letter to the House of Representatives: Oppose the Remote Transactions Parity Act,” The Heartland Institute: https://heartland.org/policy-documents/open-letter-house-representatives-oppose-remote-transactions-parity-act/