The Marketplace Fairness Act is nothing more than a 'convenience tax'

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Supporters of the Marketplace Fairness Act claim that online stores have an unfair advantage over traditional mom-and-pop businesses. 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.  
 
The federal government has no business trying to engineer the purchasing behaviors of individual consumers in a free society. It’s simply unfair.
 
To add injury to insult, the Marketplace Fairness Act undermines state sovereignty and allows for taxation without representation in five major ways:
 
• Under the Marketplace Fairness Act, a state would be allowed to reach beyond its borders to collect taxes from unrepresented businesses in other states. Further, the legislation would favor some states over others, since not all states collect sales taxes.
 
• 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. 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.
 
• Far from being “fair,” the Act would give big businesses an unfair advantage over small online businesses, which will have a much harder time paying the required taxes in each state where their customers reside. Recognizing its competitive advantage over smaller businesses, online giant retailer Amazon has come out in favor of the bill, though it traditionally opposed Internet sales taxes.
 
· While the bill does exempt small businesses earning less than $1 million per year from tax collection, “small business” as defined by the provision is a far cry from the Small Business Association’s standard, which can reach $30 million. Supporters argue the bill will save mom-and-pop businesses, but in reality it kills healthy competition.
 
• The Marketplace Fairness Act will undermine consumer privacy. Currently, states cannot ask out-of-state retailers for information on their customers, but under the Act, this would no longer be the case. Given that businesses and state revenue boards already have a dismal history of losing people’s private information, consumers should be concerned.
 
• In his effort to leap-frog the Act onto the Senate floor, Harry Reid has bypassed the usual voting process of the Senate Finance Committee, which is largely opposed to the bill. This closed-door power play is wrong. At the very least, the bill should go through the full decision process, especially since it will have such wide impact on U.S. citizens and businesses.
 
Using a closed legislative process to expand taxing authority and sacrifice free competition in the name of “fairness and equal opportunity for all” is a lesson in poetic irony. The Marketplace Fairness Act is anything but fair for small businesses, and it will stand in the way of the growth and recovery that the U.S. economy desperately needs.
 
Grassroots organizations are united in their opposition to this unfair legislation, and our elected representatives would do well to pay attention and press “cancel” on this legislative order.


Kibbe is the president of FreedomWorks and author of “Hostile Takeover: Resisting Centralized Government’s Stranglehold on America.” Follow Matt on Twitter @mkibbe