Nation's Oldest Taxpayer Group Slams Senate for Sneak Tax Attack on Internet; Girds for House Battle amid Growing Opposition

(Washington, DC)– Despite Majority Leader Harry Reid’s statement that he’d back an open debate process on the flawed Marketplace Fairness Act (MFA), supporters in both parties managed today to ram through the legislation, which dangerously expands states’ tax collection powers. The Senate’s move earned a stiff rebuke from the 362,000-member National Taxpayers Union (NTU), which has been organizing opposition to the bill in the House.

“Since neither time nor common sense was on the side of MFA’s supporters, they’ve worked to shut down committee procedures and thoughtful debate in hopes of shutting out taxpayers,” said NTU Executive Vice President Pete Sepp. “Fortunately, shutting out taxpayers doesn’t mean shutting them up, a fact that House Members are about to discover as this terrible tax grab moves to their chamber.”

Sepp noted that concerns over MFA have been intensifying from many constituencies as they become more aware of the bill’s defects. In the past week, these have included organizations representing homeschoolers, the financial services industry, and consumers who often shop online for their products. Issues such as online privacy are also coming to the fore as the reality of MFA’s proposed, intrusive tax collection apparatus sinks in. “Just like some goods they purchase in stores or online, the rhetorical packaging that MFA’s backers have wrapped around their bill is starting to fall away and reveal a very disappointing product underneath,” Sepp said.

Virtually the entire free-market, limited-government community has rallied together against MFA. An April 19 letter to Senators from 18 conservative organizations warned that MFA would “dismantle proper limits on state tax collection authority while causing serious damage to electronic and interstate commerce.” It would also impose an “unworkable collection standard” that “would create a decidedly ‘unlevel’ playing field between brick-and-mortar and online sales.” Signatories of the letter included NTU, R Street Institute, Americans for Tax Reform, and other grassroots powerhouses such as FreedomWorks and the Campaign for Liberty.

NTU offered praise to the more than two-dozen Senators who voted against MFA, but as Sepp observed, a number of supposed fiscal conservatives opted to pass the bill. “MFA is not about ‘states’ rights’ or a ‘level playing field,’ it’s about boosting states’ tax collection powers and the competitive advantage of big retailers,” he said. “Too many self-styled advocates of limited government in the Senate failed to recognize this fact or deliberately ignored it.”

“A majority of Senators may have abandoned their responsibility to protect taxpayers, small businesses, and the U.S. Constitution by enacting MFA, but House Members should avoid this mistake,” Sepp concluded. “The People’s House can live up to its nickname by saying ‘no’ to special interests and standing firm against the Marketplace Fairness Act. At the very least, lawmakers owe Americans a more thoughtful examination of this bill’s serious consequences for our economy and our federal system, through hearings and consideration of alternatives.”

NTU is a nonpartisan citizen organization founded in 1969 to work for lower taxes and limited government. The group was among the first to support the federal Internet Access Tax Moratorium and oppose the states’ Streamlined Sales and Use Tax Agreement. NTU has long argued that proposals like MFA would hit small businesses with major compliance headaches, overturn the tried and true principle of physical presence, and undermine state tax competition. Note: For more on NTU’s work in this and other public policy areas, visit