Hearing Highlights Internet Sales Tax Alternatives & Marketplace Fairness Act's Flaws

(Alexandria, VA) -- After today’s House Judiciary Committee hearing on alternatives to the Internet sales tax mandate known as the Marketplace Fairness Act (MFA), National Taxpayers Union (NTU) Executive Vice President Pete Sepp offered the following comments:

"Today's hearing not only exposed the massive cracks in the Marketplace Fairness Act’s (MFA's) foundation but also demonstrated the strength of alternatives such as origin sourcing. Proponents of MFA touted software as a magic bullet for compliance while attempting to minimize the damage that shotgun audits from other states' tax collectors would do to small businesses.

“Some pro-MFA lawmakers went on and on about leveling the playing field for ‘brick and mortar’ businesses, even as they stood by a scheme that demonstrably creates more compliance headaches for e-tailers than traditional stores – and with upwards of 38 percent of online sales attributed to said ‘brick and mortar’ stores as of 2010, there is no clear line between them.

“Others tried to pick apart ‘origin sourcing’ with hard-to-believe claims that it would throw the entire tax system into turmoil. Yet, all an ‘origin sourcing’ standard would do is have the still-small slice of commerce represented by e-tailers be subject to the same kind of tax reporting and collection that now tends to govern brick-and-mortar establishments.

“We also heard discredited statistics and studies cited to lament the 'revenue loss' to states from e-commerce under current laws, while ignoring the fact that cross-border retail shopping and tourism have long exerted the same kinds of effects. Yet, to their credit these complaints at least lay bare their central argument for rushing into a dangerous scheme like MFA: some state governments want more taxpayer dollars and less competition.

“All in all, taxpayers are grateful to Chairman Goodlatte for finally allowing alternatives to the flawed MFA scheme to be more fully explored on Capitol Hill."

NTU also submitted comments to the committee, available HERE.

For NTU & R Street’s poll finding 57% opposition to MFA click HERE.