When Rep. Paul RyanPaul Davis RyanJuan Williams: Pelosi shows her power Cheney takes shot at Trump: 'I like Republican presidents who win re-election' Cheney allies flock to her defense against Trump challenge MORE (R-Wis.) was sworn in as Speaker of the House, he promised that legislation would go through “regular order.” This pledge will be tested as Congress tries to finalize an omnibus spending bill over the next two weeks.
That’s why it’s deeply troubling that some lobbyists are urging Congress to slip the fatally flawed Marketplace Fairness Act (MFA) into the omnibus in the dark of night, in opposition to the Speaker’s promise.
But there’s a bright spot: Recently Sens. Kelly AyotteKelly Ann AyotteBiden likely to tap Robert Califf to return as FDA head Poll: Potential Sununu-Hassan matchup in N.H. a dead heat Democrats facing tough reelections back bipartisan infrastructure deal MORE (R-N.H.), Marco RubioMarco Antonio RubioRepublicans would need a promotion to be 'paper tigers' Defense & National Security — Military starts giving guidance on COVID-19 vaccine refusals Blinken pressed to fill empty post overseeing 'Havana syndrome' MORE (R-Fla.), Steve Daines (R-Mont.) and Mike LeeMichael (Mike) Shumway LeeRetreating economy creates new hurdle for Democrats in 2022 McConnell vows GOP won't help raise debt ceiling in December after Schumer 'tantrum' Senate locks in deal to vote on debt ceiling hike Thursday MORE (R-Utah) urged Ryan to oppose any efforts to pass “misguided and destructive” Internet tax schemes such as the Marketplace Fairness Act (MFA). They wrote: “instead of protecting and fostering e-commerce, [MFA] would stifle small business growth and job creation.”
This is a timely request, since we know that lobbyists for big box stores are desperate to attach MFA—or its close cousin from the House, the Remote Transaction Parity Act (RTPA)—to other pieces of legislation, thankfully with no success so far.
These bills suffer from similar fatal flaws. They impose taxes based on the location of the purchaser, adding enormous cost, complexity, and compliance requirements on small- and medium-sized businesses that can scarcely afford it.
Analysis indicates that MFA would impose $80,000 to $290,000 in initial implementation costs, with another $57,000 to $260,000 in annual upkeep. For many of these companies, costs of this magnitude are questions of life and death. We should take actions to support these companies, not crush them with huge compliance burdens.
Additionally, under MFA companies would be forced to comply with the tax laws, holidays, and exemptions from any one of 10,000 jurisdictions across the nation. Those who tout the merits of MFA or RTPA point to “free software” as the solution. But this only makes the situation worse. Small businesses would face huge costs of integrating this software with their existing systems.
Furthermore, this legislation opens the door to the risk of government audits from any one of the 46 states that apply sales tax.
MFA and its ilk are legislation that only the big box stores and their high-priced lawyers could love. When analyzed closely, one can easily see they are designed to give big retailers a competitive advantage over smaller online and remote sellers.
There is a much better and simpler approach being advocated by the chairman of the committee of jurisdiction, Rep. Bob GoodlatteRobert (Bob) William GoodlatteThe job of shielding journalists is not finished Bottom line No documents? Hoping for legalization? Be wary of Joe Biden MORE (R-Va.). Rather than impose Internet sales tax based on the location of the purchaser, the Goodlatte approach would determine it based on the location of the seller. Small businesses would only have to apply a single sales tax rate or set of rates, and would only face potential audits from the states in which they operate. This cuts out considerable complexity, creating the least amount of burden for small- and mid-size catalog and Internet sellers.
Just as importantly, this approach reflects the principles laid out and endorsed by the new House leadership—that legislation should follow regular order and go through the committee of jurisdiction - namely, the House Judiciary Committee.
Solving the Internet sales tax dilemma is critically important. But we should do it in a way that respects both the Committee process in Congress, as well as allowing small and medium sellers to survive and not to be crushed by an avalanche of cost, complexity and chaos.
Davison is co-founder of TruST and president of the American Catalog Mailers Association.