(Washington, DC) – Those who hear afamiliar bark from an Internet tax-collection bill unveiled today by SenatorsMike Enzi (R-WY) and Lamar Alexander (R-TN) will be in store for a bite as well,according to the 362,000-member National Taxpayers Union (NTU). Though itvaries in certain respects with the “Main Street Fairness Act” (MSFA) firstintroduced by Senator Richard Durbin (D-IL, who also supports theEnzi-Alexander bill), the new “Marketplace Fairness Act” (MFA) still carriesthe threat of harming the economy and suppressing beneficial tax competitionamong states. NTU Executive Vice President Pete Sepp offered the followingstatement in opposition to the bill:
Supportersof the Marketplace Fairness Act might claim their bill is a breed apart fromthe Main Street Fairness Act, but those Americans on the receiving end of thislegislation’s teeth will still feel serious pain. For one, the MSFA would allowrevenue-hungry politicians to form a predatory pack called the StreamlinedSales and Use Tax Agreement; the Enzi-Alexander MFA would require each state totravel with that pack or meet some conditions for scavenging rights to pickover the bones of businesses outside their normal taxing territory. Neitherbill provides adequate small-firm protections against tax collection liabilitieson remote sales, which can’t simply be brought to heel with ‘free’ compliancesoftware. Neither properly recognizes the variety of taxes that onlineretailers already pay – as well as the tremendous benefits the Internet givessmall firms to keep their overhead low and their marketing visibility high. Inany case, how is it ‘fair’ to let costly multistate obligations like these(which don’t bedevil pure ‘brick and mortar’ establishments the same way) chaseafter Internet-based businesses?
Worstof all, however, is that the MSFA would begin to devour the system oftax-policy competition among states that has served our country so well. Thoughits latest successor, the Enzi-Alexander MFA, offers an advisory clause thathigher revenues from new collection obligations should be used to reduce taxrates, taxpayers can be forgiven for worrying that once the money startsfilling state coffers, it won’t be coming back.
Designinga truly revenue-neutral system that shields small sellers from harsh compliancecosts will take more comprehensive protections and reforms than MFA or MSFA canpossibly offer. One step to explore would be requiring all firms to collect salestaxes only for the jurisdiction where they’re based, rather than for multitudesof governments around the country. Another would be supporting SenateResolution 309 from Senators Wyden (D-OR) and Ayotte (R-NH), which affirmsCongress’ intent not to give states ‘the authority to impose any new burdensomeor unfair tax collecting requirements on small Internet businesses.’ Whether proposed as stand-alone legislation or part ofa ‘Supercommittee’ package, the MSFA or the MFA would hinder rather than help small-businessjob creation. Their barks and bites may be different, but taxpayers know both thesetwo ‘dogs’ could hunt down and hurt our chance for an economic recovery.Elected officials must do better.
NTU is anonpartisan, nonprofit citizen organization founded in 1969 to work for lowertaxes, smaller government, and economic freedom at all levels. The group wasamong the first to support the federal Internet Access Tax Moratorium andoppose the states’ Streamlined Sales and Use Tax Agreement. Note: Formore on NTU’s work in this and other public policy areas, visit www.ntu.org.