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An Open Letter to the House of Representatives Republican Caucus: Sign Rep. Massie’s Letter Opposing the Marketplace Fairness Act

May 9, 2013

Dear Representative:

On behalf of the 362,000-member National Taxpayers Union (NTU), I write in strong support of Representative Thomas Massie’s (R-KY) letter to House Speaker John Boehner and Majority Leader Eric Cantor urging the House not to take up any version of the destructive Marketplace Fairness Act (MFA). This includes S. 743, recently passed by the Senate.

NTU has stridently opposed MFA on a number of grounds. The bill would hinder tax competition among the states, and may even encourage governments to “round up” their levels. The Supreme Court’s Quill ruling has prevented state tax collectors from aggressively reaching across their borders, but MFA would overturn this important protection against abuse of power, exposing taxpayers to the whims of destructive extraterritorial state tax collection schemes.

The bill’s attempt to carve out a sales tax-only exception to this ruling likely won’t survive long, and the way would be paved for state administrators to gain authority over other taxes and perhaps even regulations. Finally, MFA gives wide latitude to define taxable “nexus,” including its controversial extension to online advertising affiliates. Even states not participating in MFA’s framework would have new powers.

Furthermore, MFA would heap heavy burdens upon small businesses, which would face the task of collecting and remitting to nearly 10,000 taxing jurisdictions. MFA’s supporters have tried to mitigate these burdens with a “small seller” exemption, which is paltry by comparison to other government definitions of what constitutes a small business. Further, it fails to acknowledge that so many of the “Main Street” businesses the proposal aims to protect are actually thriving because of, not in spite of, the Internet. E-commerce allows “mom and pop” firms to market their goods and services to the entire world, not just to their immediate neighborhoods. It also gives these firms a much wider range of options to purchase supplies and other inputs, maximizing their cost-efficiency and productivity.  

It should also be noted that MFA is widely opposed by limited-government organizations and a majority of Republicans voted against S. 743 in the Senate. Given these circumstances, bringing MFA to the House floor risks violating the “Hastert Rule.” NTU urges the House to steer clear of this deeply flawed legislation. To that end we enthusiastically “second” Rep. Massie’s letter and strongly urge all Representatives to join him in signing it.

Nan Swift
Federal Affairs Manager