An Open Letter to Fiscal Conservatives in the Senate: The “Main Street Fairness Act” Is a Dead-End Street for Taxpayers and Small Businesses!
Dear Senator:
On
behalf of the 362,000-member National Taxpayers Union (NTU), I write to express
our deep concern about soon-to-be-introduced legislation under the likely name
of “Main Street Fairness Act.” We strongly urge Senators against supporting
this bill, which according to media reports will be authored by Senator Durbin.
Despite its title, the Main Street Fairness Act would in our opinion inflict a
great deal of harm upon taxpayers as well as small businesses, by effectively
giving Congress’s blessing to a multistate scheme known as the Streamlined
Sales and Use Tax Agreement (SSUTA).
NTU
has long opposed SSUTA on a number of grounds. Contrary to proponents’ claims,
retail e-commerce purchases are not “tax-free.” Online sales involving a buyer
and a seller in the same state are subject to tax at purchase, while remote
sales are subject to use tax on the part of the customer. Numerous other tax
liabilities are triggered in the course of this activity, including income and
payroll taxes for the employees involved and fuel taxes for shipping.
Furthermore,
SSUTA would heap heavy burdens upon small businesses, which would face the task
of collecting and remitting taxes in an environment with as many as 15,000
jurisdictions capable of levying taxes on sales. These burdens would not simply
disappear through the existence of compliance software, as some supporters of
SSUTA seem to imply. After all, despite the widespread use of preparation
programs for federal individual and corporate income taxes, citizens and
businesses spent some 7.6 billion hours in 2009 complying with Treasury Department
paperwork, according to the Information Collection Budget. NTU calculates that
the value of this time alone (not counting software and other costs) was
more than $227 billion.
Equally
important, taxpayers could be forgiven for worrying that SSUTA’s multistate
structure would naturally encourage participating governments with lower sales
tax rates to “round up” their levels, thus depriving citizens of the tax
competition that has characterized the “laboratory of the states.” Of more
immediate concern is that so many of the “Main Street” businesses Senator
Durbin’s forthcoming bill aims to protect are actually thriving because of, not in spite of, the
Internet. E-commerce allows “mom and pop” firms and even sole proprietorships
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.
Legitimate
debate continues over what constitutes taxable nexus in multistate commerce,
and over matters such as how states can better make citizens aware of use taxes.
Thoughtful legislation, such as the Business Activity Tax Simplification Act
(H.R. 1439) and H. Res. 95 (supporting the preservation of Internet
entrepreneurs and small businesses) has been introduced in response. The Main
Street Fairness Act is certainly not among these appropriate, pro-taxpayer
remedies.
Last
week, more than two dozen organizations – among them NTU – sent a letter asking
all Senators to “declare net tax increases ‘off the table’ in any budget or
debt limit negotiations.” Although we do not speak for other groups on SSUTA,
we believe that the principles outlined in that joint statement would also advise
against any Senator’s support for the Main Street Fairness Act. States, many of
which are facing fiscal problems of their own, must likewise look to spending
restraint rather than new revenues for solutions. Accordingly, we hope that you
and your fellow Senators will avoid cosponsoring or voting for the Main Street
Fairness Act. Please feel free to call upon us if we can offer advice or
assistance on this issue.
Sincerely,
Pete Sepp
Executive Vice President
108 North Alfred Street Ø Alexandria, Virginia 22314 Ø Phone: (703) 683-5700 Ø Fax: (703) 683-5722 ØWeb: www.ntu.org
Letter
