The Senate moved closer to passing the Internet sales tax on Thursday. The chamber had already started debate on the measure, dubbed the “Marketplace Fairness Act,” but the vote last week bypassed any hope of a filibuster. Some conservative groups are increasing their efforts in opposition to the tax.
Americans for Tax Reform (ATR), headed by Grover Norquist, presented the constitutional case against the Internet sales tax. The case is in response to recent comments by David French, a lobbyist for the National Retail Federation, who said,“The industry is evolving very rapidly, and the law today is a 20th-century interpretation of an 18th-century document that is holding back the entire retail industry as it adapts to 21st-century consumer preferences and demand.”
“The Commerce Clause in the U.S. Constitution affirms that states cannot tax across their borders. Physical presence within a state’s boundaries is required for a state to be able to tax a business, a consumer, or a sale,” John Kartch wrote at ATR’s blog in response to French. “The Constitution is clear: a person or business must be physically present within a state’s borders in order to be taxed. By suggesting the Constitution is outdated, Internet tax pushers align themselves with the rhetoric of far-left judicial activists.”
Kartch noted the five points that ATR has raised about the Marketplace Fairness Act, including that the bill expands state tax authority, makes tax collection more complex, and discourages tax competition. And outside of Kartch’s points, if supporters of the Internet sales tax believe the Constitution is out-of-date and/or being wrongly interpreted, there is a process to amend it.
Matt Kibbe, President and CEO of FreedomWorks, also weighed in on the push for the Internet sales tax, directly taking on the claims of brick-and-mortor retailers that are pushing the taxes and also noting that the measure will create 9,600 taxing jurisdictions.
“Supporters of the Marketplace Fairness Act claim that online stores have an unfair advantage over traditional mom-and-pop businesses,” wrote Kibbe in an op-ed at The Hill. “They claim the Act would “level the playing field” by collecting the revenue that consumers owe the state for choosing online shopping over buying local. (They fail to consider that the absence of sales tax costs are often offset by the shipping costs endured exclusively by online stores.)”
“In other words, the Marketplace Fairness Act wants to authorize states to charge you a ‘convenience tax’ for ordering your new iPhone 5 online rather than camping out in front of the Apple store,” he noted. “The federal government has no business trying to engineer the purchasing behaviors of individual consumers in a free society. It’s simply unfair.”
Kibbe went on to tackle the complexity issues of the proposal. “The Act would create an unfair burden on online sellers, which would be forced to wade through tax legislation for all states, cities and towns where they do business,” he wrote. “This burden would prove virtually impossible for most small businesses. In fact, in an open letter against the bill, signed by multiple grassroots organizations, the R Street Institute pointed out that there are 9,600 separate taxing jurisdictions in the United States. Forcing businesses to comply with taxes on that scale goes directly against the Commerce Clause of the U.S. Constitution, which protects against an unreasonable burden on interstate commerce.”
The Marketplace Fairness Act doesn’t only assault the Constitution, it’s also a direct assault on small businesses. Retailers and big box stores want to snuff out their competition by putting them at a disadvantage.
The Senate will bring the legislation up for a final vote next week. Unless there is some sort of epiphany as to the ramifications of passing yet another mandate onto small businesses, the Marketplace Fairness Act will pass. The House of Representatives will be the last line of defense in stopping this bill. Let’s hope they’re up to the task.