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Get Ready for Another Round of Internet Sales Tax Brawling

Douglas Kellogg
February 27, 2014

The Internet Sales Tax debate is about to heat up yet again! Today, NTU attended a briefing organized by Rep. Steve Daines (R-MT) that offered many good reasons to be wary of the Marketplace (un)Fairness Act (MFA). The briefing featured Montana Attorney General Tim Fox, Phil Bond of the WE R HERE Coalition, and R Street’s Andrew Moylan. There will a formal hearing next week and those interests motivated by new revenue, or a business advantage, see this is their chance to make headway in the House.

Fox made clear that the MFA is not so much about e-commerce, as it is about the 31 states unable (or unwilling) to balance their books – at a total of $55 billion in collective deficit – looking for the power to snag more revenue. In this case that revenue would come from out-of-state businesses who they previously had no ability to burden.

The Montana AG said the MFA scheme was like an “illicit drug” and that it would make the federal government a proverbial drug dealer, leading addicted states to more revenue, rather than fiscal responsibility. He also alluded to the possibility of legal action by the states should this scheme move forward.

Andrew Moylan explained the significance of the poll commissioned by NTU and R Street a few months ago (which you can read through HERE). He emphasized that the poll found across the board opposition to an MFA-type Internet Sales Tax scheme, and that people understood the current taxing principles such a policy would destroy.

WE R HERE’s Phil Bond added insight on the plight of small business in this struggle, saying thousands of enterprises would disappear overnight, thanks to 17 cents per dollar of additional compliance costs.

Of the risk of audit from over 10,000 taxing jurisdictions, Bond quipped, “When you get an audit, there’s not an app for that.”

More ominously Bond warned of the unintended consequences of such a broad change in law. For the pro-tax group, the dollar signs flashing in front of them may not come to pass, these taxes on the state level in California and Illinois have fallen woefully short of revenue projections. He also discussed consumers dealing with their state watching what they were buying online because they in essence owned them.

Taxpayers can do more than just hope the House listens to these, and many other, dire consequences of a Marketplace Fairness Act scheme. They can contact their representatives and tell them: we understand what MFA would do, don’t trash my constitutional protection against out-of-state taxing authorities, and don’t destroy the system of interstate competition that has served our country so well.

This remains a long fight, but taxpayers have to stay on their feet and never give up.


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