The editors of National Review Online (NRO) have written two separate editorials opposing the so-called Marketplace Fairness Act, which NRO says on March 22, 2013 is "a sales tax for Internet transactions." They begin their editorial sayiing. "The founding battle cry of the United States of America was “No taxation without representation!” Senator Mike Enzi (R., Wyo.) and Senator Dick Durbin (D., Ill.) propose to challenge that with the misnamed Marketplace Fairness Act of 2013.
More recently, they penned a second editorial, on April 25, 2013, which begins:
"State and local governments are engaged in an unseemly gold rush, pushing for a new Internet sales-tax regime that would empower them to wring revenues from businesses and individuals far outside their jurisdictions. They seek to overturn the foundational American presumption against taxation without representation, and they do so abetted by parasitical business interests that seek to use the tax code to hobble their more nimble online competitors. When the taxman and the National Retail Federation are on the same side of an issue, there is mischief afoot." (emphasis added)
The NRO editors suggest a "sensible solution," writing:
"The sensible solution is to treat online retailers exactly like any other business: Subject to collecting and remitting sales taxes for the jurisdiction in which they are physically present. To the extent that there is any role for the federal government in this issue, it would be in establishing rules (if necessary) for determining who has jurisdiction over sales involving retailers with multiple physical locations. But we would remind Senator Enzi — and any House Republican thinking of backing this bill — that it is the role of the federal government to enable interstate commerce, not to facilitate an unholy alliance between big business and big government. There was a time when Republicans were clear on that."
It shouldn't surprise taxpayers to learn that taxpayer dollars are being used to lobby against taxpayer interests. In the May 1, 2013 newsletter, County Connections, of the Virginia Association of Counties, Virginia's counties are urged to "reach out to Sen. Mark Warner and Sen. Tim Kaine and urge them to support the Marketplace Fairness Act and vote for final passage on May 6." The VACo newsletter also provide links to both a policy brief and a press release by another lobbying outfit paid for with taxpayer dollars, the National Association of Counties (NACo).
The policy brief, especially, provides much of the background, which goes back to a 1967 Supreme Court decision.
In a "vote alert on April 22, 2013," the National Taxpayers Union urged "all Senators to vote "NO" on S.743, the "Marketplace Fairness Act (MFA) of 2013." NTU wrote, in part:
"Widely opposed by limited-government organizations, this deeply flawed legislation, which opens the door for destructive extraterritorial state tax collection schemes, would inflict a great deal of harm upon taxpayers as well as small businesses.
"NTU has stridently opposed MFA on a number of grounds. The bill would hinder tax competition among the states, and may even encourage governments to “round up” their levels. The Supreme Court’s Quill ruling has prevented state tax collectors from aggressively reaching across their borders, but MFA would overturn this important protection against abuse of power. The bill’s attempt to carve out a sales-tax only exception to this ruling likely won’t survive long, and the way would be paved for state administrators to gain authority over other taxes. Finally, S. 743 gives wide latitude to define taxable “nexus,” including its controversial extension to online advertising affiliates. Even states not participating in MFA’s framework would have new powers."
A search at the NTU website shows there is considerable reading about the so-called Marketplace Fairness Act. Especially interesting are two posts at their blog, Government Bytes. In one post on March 22, 2013, Doug Kellogg identifies all the conservative groups that oppose the MFA. In a second post on April 30, 2013, Manzanita McMahon provides an "impressive slate of opinion pieces" that explain why the MFA is "terrible."
At the Tax Foundation's Tax Policy Blog, Joe Henchman has numerous contributions to understanding the MFA. In an April 26, 2013, post, he writes about "what's in" the MFA. Earlier on April 23, he provided a "run down" of his Congressional testimony.
The Heritage Foundation's blog, The Foundry, also has numerous post about the MFA -- including here, here, here, and here. And that's since mid-April. And here, Elliot Gaiser provides a video and 10 reasons for opposing the MFA.
Are there still question about the MFA legislation? In a letter to one of the bill's sponsors, Sen. Mike Enzi (R-Wyoming), Americans for Tax Reform president Grover Norquist listed 16. The first of them:
"What measures protect businesses from tax audits, court proceedings and penalties like tax liens imposed on a business by state departments of revenue where the business has no physical presence? How will businessmen and women be protected over time from politicians in a different state that they cannot vote for or against? Is there a danger of establishing taxation without representation?"
In a full-page letter to your scribe dated April 30, 2013, from Senator Tim Kaine (D-Virginia), Sen. Kaine says there is not much to worry about, saying the legislation "would simply allow states to collect tax on purchases made online if they so choose."
Among the articles concerning the MFA include:
"Do you do at least some of your shopping online? If you’re like most Americans, the answer is “yes.” This leads to my next question: Would you like to pay more for the items you buy?
"I’m guessing the answer is “no.” But if Congress passes the Marketplace Fairness Act, you can expect to see your totals rise when you go to checkout with your online shopping cart."
- Forbes: Michael Greve, chairman of the board of the Competitive Enterprise Institute and professor at George Mason University, explains the arguments against the MFA. He also points out:
"The debate long predates the Internet – we had the same debate over catalogue sales. Good, bad and idiotic arguments on both sides have been rehearsed time and again. But the Senate’s impending consideration of the Marketplace Fairness Act provides occasion for a few reminders."
- FrontPage Magazine: Mark Hendrickson writes the Internet sales tax is nothing more than "another assaul on the Constitution." Here is a part of his explaination:
"The reason so many senators favor the Marketplace Fairness Act is simple: State governments are desperate for revenue to fund their ever-escalating expenditures, and their allies in the U.S. Senate are trying to help them collect it. Internet sales in the US totaled $226 billion last year, and a revenue stream that large easily becomes a tempting target for big spenders.
"Proponents of the tax focus on “fairness.” They claim that out-of-state online vendors enjoy a competitive advantage against local brick-and-mortar companies that must pay sales tax to their state governments, and that this inequitable situation must be corrected. This is economically ignorant. The whole point of economic competition is that some businesses have competitive advantages over others. This gives consumers choices and they end up buying from the businesses that give the most value for the least money."
- Pajamas Media: Rodrigo Sermeno provides a balanced story, but says the MFA "would allow states to force Internet retailers to collect taxes from their customers."
- Yahoo! Finance: Reports on a press release from the Alliance for Main Street Fairness (AMSF), which highlights "eBay's hypocrisy regarding the Marketplace Fairness Act, which is scheduled for a final vote in the U.S. Senate on Monday, May 6." For the record, Amazon supports the legislation while eBay opposes it, in case you didn't notice from the press release.
If you oppose the "misnamed" Marketplace Fairness Act, and want to petition Congress, you can do so by signing a Grassfire.com online petition here.
Arlington County taxpayers may want to ask their two U.S. senators and U.S. representative whether they, too, consider the above to be valid cases of waste and abuse in the federal government. You can contact them at:
- Senator Mark Warner (D) - write to him or call (202) 224-2023
- Senator Tim Kaine (D) -- write to him or call (202) 224-4024
- Representative Jim Moran (D) -- write to him or call (202) 225-4376
And tell them ACTA sent you! Remind your elected representatives how NRO concluded the first editorial cited above, i.e., "taxation without representation is anathema to all Americans — except, apparently, some of those serving in Congress (including Republicans who should know better), and those businesses that would benefit financially from violating this fundamental principle. It is a bad policy from both the economic and moral points of view. "
UPDATE (5/5/13) In a op-ed, posted today at RealClearPolitics.com, Sen. Ted Cruz (R-Texas) explains why he opposes the Internet tax bill," including:
"Basic tenets of economics dictate that when you tax something, you get less of it. That’s why it’s incomprehensible that the U.S. Senate is moving to raise taxes on one of the brightest sectors of our struggling economy.
"The Internet is a thriving ecosystem of entrepreneurial freedom that should be protected and nourished. It has allowed new businesses to compete in the national marketplace in ways that would have been impossible 15 years ago, and it empowers consumer choice. But tax-hungry politicians view the Internet as yet another source of revenue to bail out their big-spending governments.
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Senators who vote for it are voting to impose audits, compliance costs, lost wages, and inefficiency on small businesses in every state. And they are potentially crippling an engine of new job creation at a time of economic struggle. This bill will not create jobs; it will not create new opportunities; and it will not create the economic growth our country needs and our people deserve.
< . . . >
"Naturally, state and local governments are salivating at the prospect of getting a purported $23 billion in new revenue from the private economy. Especially when the out-of-state consumers paying those taxes and the out-of-state businesses owners who collect them can’t vote them out of office."