Dear Representative:
On behalf of the 362,000 members of the National Taxpayers Union (NTU), I urge you to oppose H.R. 5660, the cynically titled "Main Street Fairness Act." Introduced by Representative William Delahunt (D-MA), this legislation would give federal backing for state efforts to impose new predatory taxes on Internet purchases. The states' ill-advised scheme, known as the "Streamlined Sales Tax Project" (SSTP), could potentially saddle American consumers with billions in higher taxes on the products they buy online.
Through legislative hearings, public education campaigns, and grassroots activism, NTU has long opposed these kinds of taxes because they harm consumers and are not consistent with sound principles of taxation. Sales taxes are charged, in part, to provide for important infrastructure investments like roads and police protection. Traditional "brick-and-mortar" stores that have a physical presence in a state are a burden on and a direct beneficiary of those investments, while online retailers are not.
Furthermore, proponents of SSTP often create the false impression that online purchases are "tax-free." Aside from the income, property, and profits taxes that online retailers and their employees pay, Internet purchases between a customer and a business in-state are already subject to sales tax. Many companies offering online shoppers the convenience of returning their purchases to local stores also voluntarily remit sales taxes. Items ordered on the Internet are shipped in vehicles that pay fuel and other taxes.
While its supporters claim that SSTP can aid dramatically in tax simplification efforts, there is still in reality a mind-bending amount of complexity even after some two dozen states have passed conforming legislation. There are nearly 8,000 separate state and local taxation authorities, with often-varying filing rules and processes, and this legislation would not substantively alter that landscape. Rather than some noble scheme to simplify taxes, SSTP should be seen for what it is: a money grab for states that have spent recklessly in recent years.
We understand that there are efforts underway, including a resolution from Representative Paul Hodes (D-NH), to exempt some small businesses from the crushing effects of the legislation. NTU is supportive of efforts to ease the burden on the real engine of America's economy: small businesses. However, we will strongly oppose a bill that gives the nod to predatory taxes affecting any kind of business, whether small, large, or in between, because ultimately taxpayers and consumers of all stripes will bear the burden of these unfair tax hikes.
Once again, NTU urges you to oppose H.R. 5660, and any roll call votes on this legislation will be significantly weighted in our annual Rating of Congress.
Sincerely,
Andrew Moylan
Director of Government Affairs