NTU urges all Senators to vote “NO” on S. 743, the “Marketplace Fairness Act (MFA) of 2013.” Widely opposed by limited-government organizations, this deeply flawed legislation, which opens the door for destructive extraterritorial state tax collection schemes, would inflict a great deal of harm upon taxpayers as well as small businesses.
NTU has stridently opposed MFA on a number of grounds. The bill would hinder tax competition among the states, and may even encourage governments to “round up” their levels. The Supreme Court’s Quill ruling has prevented state tax collectors from aggressively reaching across their borders, but MFA would overturn this important protection against abuse of power. The bill’s attempt to carve out a sales-tax only exception to this ruling likely won’t survive long, and the way would be paved for state administrators to gain authority over other taxes. Finally, S. 743 gives wide latitude to define taxable “nexus,” including its controversial extension to online advertising affiliates. Even states not participating in MFA’s framework would have new powers.
Furthermore, MFA would heap heavy burdens upon small businesses, which would face the task of collecting and remitting to nearly 10,000 taxing jurisdictions. MFA’s supporters have tried to mitigate these burdens with a “small seller” exception, which is paltry by comparison to other government definitions of what constitutes a small business. Further, it fails to acknowledge that so many of the “Main Street” businesses the proposal aims to protect are actually thriving because of, not in spite of, the Internet. E-commerce allows “mom and pop” firms to market their goods and services to the entire world, not just to their immediate neighborhoods. It also gives these firms a much wider range of options to purchase supplies and other inputs, maximizing their cost-efficiency and productivity.
It is also important to note that MFA need not be the sole option for addressing the perceived Internet sales tax “problem.” Instead of bypassing key committee consideration and rushing to pass what is a very controversial bill, Members of what is supposed to be the world’s greatest deliberative body should consider other alternatives – such as origin sourcing – that could avoid undermining tax competition and safeguards against excessive tax collection authority.
Roll call votes on S. 743 will be among the most heavily weighted of the year in NTU’s annual Rating of Congress and a “NO” vote will be considered the pro-taxpayer position.
If you have any questions, please contact NTU Federal Affairs Manager Nan Swift at (703) 683-5700