Dear Senator:
Onbehalf of the 362,000-member National Taxpayers Union (NTU), I write to expressour deep concern about soon-to-be-introduced legislation under the likely nameof “Main Street Fairness Act.” We strongly urge Senators against supportingthis 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 agreat deal of harm upon taxpayers as well as small businesses, by effectivelygiving Congress’s blessing to a multistate scheme known as the StreamlinedSales and Use Tax Agreement (SSUTA).
NTUhas long opposed SSUTA on a number of grounds. Contrary to proponents’ claims,retail e-commerce purchases are not “tax-free.” Online sales involving a buyerand a seller in the same state are subject to tax at purchase, while remotesales are subject to use tax on the part of the customer. Numerous other taxliabilities are triggered in the course of this activity, including income andpayroll taxes for the employees involved and fuel taxes for shipping.
Furthermore,SSUTA would heap heavy burdens upon small businesses, which would face the taskof collecting and remitting taxes in an environment with as many as 15,000jurisdictions capable of levying taxes on sales. These burdens would not simplydisappear through the existence of compliance software, as some supporters ofSSUTA seem to imply. After all, despite the widespread use of preparationprograms for federal individual and corporate income taxes, citizens andbusinesses spent some 7.6 billion hours in 2009 complying with Treasury Departmentpaperwork, according to the Information Collection Budget. NTU calculates thatthe value of this time alone (not counting software and other costs) wasmore than $227 billion.
Equallyimportant, taxpayers could be forgiven for worrying that SSUTA’s multistatestructure would naturally encourage participating governments with lower salestax rates to “round up” their levels, thus depriving citizens of the taxcompetition that has characterized the “laboratory of the states.” Of moreimmediate concern is that so many of the “Main Street” businesses SenatorDurbin’s forthcoming bill aims to protect are actually thriving because of, not in spite of, theInternet. E-commerce allows “mom and pop” firms and even sole proprietorshipsto market their goods and services to the entire world, not just to theirimmediate neighborhoods. It also gives these firms a much wider range ofoptions to purchase supplies and other inputs, maximizing their cost-efficiencyand productivity.
Legitimatedebate 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 Internetentrepreneurs and small businesses) has been introduced in response. The MainStreet Fairness Act is certainly not among these appropriate, pro-taxpayerremedies.
Lastweek, more than two dozen organizations – among them NTU – sent a letter askingall Senators to “declare net tax increases ‘off the table’ in any budget ordebt limit negotiations.” Although we do not speak for other groups on SSUTA,we believe that the principles outlined in that joint statement would also adviseagainst any Senator’s support for the Main Street Fairness Act. States, many ofwhich are facing fiscal problems of their own, must likewise look to spendingrestraint rather than new revenues for solutions. Accordingly, we hope that youand your fellow Senators will avoid cosponsoring or voting for the Main StreetFairness Act. Please feel free to call upon us if we can offer advice orassistance on this issue.
Sincerely,Pete SeppExecutive Vice President
108 North Alfred Street Ø Alexandria, Virginia 22314 Ø Phone: (703) 683-5700 Ø Fax: (703) 683-5722 ØWeb: www.ntu.org