While all eyes are on the Boston bombings and the aftermath of the suspects’ death and capture along with a dragnet arresting several other suspects, the Senate has been very busy. That’s right, they passed CISPA, the internet spying bill, and now Senate Majority Leader Harry Reid (D-NV) has an internet sales tax bill on a fast track. That’s right, these Socialists never sleep. They are out to squeeze every penny from the American people that they can. The Marketplace Fairness Act (Ironically, this is anything but fairness) may receive a vote on the Senate floor this week and since it’s after your money it has Barack Obama’s full support. The MFA calls upon states to join the existing Streamlined Sales and Use Tax Agreement or follow what are essentially five rules:
- Notify retailers in advance of any rate changes within the state
- Designate a single state organization to handle sales tax registrations, filings, and audits
- Establish a uniform sales tax base for use throughout the state
- Use destination sourcing to determine sales tax rates for out-of-state purchases (a purchase made by a consumer in California from a retailer in Ohio is taxed at the California rate, and the sales tax collected is remitted to California to fund projects and services there)
- Provide free software for managing sales tax compliance, and hold retailers harmless for any errors that result from relying on state-provided systems and data
The Wall Street Journal reports,
For Senators curious about what they’re voting on, it is the same flawed proposal that Mike Enzi (R., Wyo.) introduced in February. It has been repackaged to qualify for a Senate rule that allows Majority Leader Harry Reid to bypass committee debate and bring it straight to the floor.
Mr. Enzi’s Marketplace Fairness Act discriminates against Internet-based businesses by imposing burdens that it does not apply to brick-and-mortar companies. For the first time, online merchants would be forced to collect sales taxes for all of America’s estimated 9,600 state and local taxing authorities.
New Hampshire, for example, has no sales tax, but a Granite State Web merchant would be forced to collect and remit sales taxes to all the governments that do. Small online sellers will therefore have to comply with tax laws created by distant governments in which they have no representation, and in places where they consume no local services.
Meanwhile, New Hampshire’s brick-and-mortar retailers will bear no such burden. They will not be required to collect taxes on the many customers who drive across the Maine and Massachusetts borders to shop in New Hampshire. Bill sponsors say it would be too big a hassle to force traditional retailers to ask every walk-in customer where they live, but these Senators are happy to impose new obligations online.
The Enzi plan would require a centralized tax collector for each state or for a group of states that would gather both state and local levies from the online merchants. His office concedes that could still mean 27 or more different auditors of a Web-based business—which is better than 9,600 but hardly qualifies as simplicity.
Do you see where this is going? I don’t think businesses should be collecting taxes for government in the first place. They certainly aren’t paid by the government to do so. Second, government is only seeking to control the internet through taxation and put more money in the government coffers. This is ultimately an open attack on liberty and on the future of internet commerce.
S. 743 is an attempt at internet tax collecting which would overturn the Supreme Court’s 1992 decision in Quill v. North Dakota that forcing businesses to collect and remit taxes to jurisdictions where they have no physical presence was too big a burden. While the court’s ruling applied to catalogs in the pre-Internet age, it established an important principle of cross-state tax accountability. In other words, this will be taxation without representation and it will be more forced servitude to the government by internet businesses without pay.
Brad Plumer answers some questions about the bill here and provides some good information. He even points out that “A variety of states have tried to enact ‘Amazon laws’ forcing retailers either to collect tax or to notify customers of the requirement to buy tax. But as Alan Viard of the American Enterprise Institute explains here, it’s not clear these laws are constitutional and they’ve been challenged in court. What’s more, the patchwork of state laws is confusing. That’s why the Senate is stepping in.”
In addition to this being a really bad idea. It’s also unconstitutional. According to Article 1 Section 9 of the U.S. Constitution:
No Tax or Duty shall be laid on Articles exported from any State.
For further reading on the understanding of this clause, may I recommend the Federalist blog here.
Dr. Gary North, the Tea Party Economist, makes this simple to understand. He writes, “In this case, ‘fairness’ means “customers should pay more. That’s fair.” This includes customers in states that have no sales tax. They will if this bill becomes law. If the House votes for it, the law will impose sales tax collection requirements on any U.S.-based firm that sells anything out of state. If the company sells $1 or more a year, it becomes subject to the tax. Companies located outside the U.S. will not have to pay. The law cannot be enforced outside the USA. This means that consumers will be charged to buy items sold by firms that have no physical presence in their states.”
So is it likely the bill will pass in the Senate? It looks that way. A similar bill was provided as an amendment to the Senate budget resolution and passed with a vote of 75-24 near the end of March. It appears from those votes that could result in overcoming a filibuster, which we would expect from the likes of Senators Rand Paul (R-KY), Ted Cruz (R-TX), and Mike Lee (R-UT). The current Senators leading the opposition on the measure are Senators Ron Wyden (D-OR) and Kelly Ayotte (R-NH).
Contact your Senator today and urged them to vote no on this enlargement of government that will have enormous ramifications for the economy and business should it be passed.Don't forget to Like Freedom Outpost on Facebook and Twitter, and follow our friends at RepublicanLegion.com.
Become an insider!
Sign up for the free Freedom Outpost email newsletter, and we'll make sure to keep you in the loop.