Senate Vote to Advance Internet Tax Scheme is Assault on Taxpayers, Internet Commerce, Citizen Group Declares

(Washington, DC) – By passing an amendment to the Senate Budget Resolution – with Republican support – to promote legislation giving states vast new tax collection powers, lawmakers have startlingly betrayed constitutional taxpayer protections and put small online businesses in danger, risking a backlash against the political establishment. That’s the view of the 362,000-member National Taxpayers Union, which opposed the amendment add-on to the Senate Budget Resolution, which could help grease the skids for passage of the so-called “Marketplace Fairness Act” (MFA), sponsored in the upper chamber by Sens. Enzi (R-WY) and Durbin (D-IL).

NTU Executive Vice President Pete Sepp offered the following comments on the amendment and on MFA:

“Friday’s Senate vote was the latest result of a well-funded lobbying machine that runs on snake oil and spits out bogus platitudes about ‘fairness.’ But try as they might, the gears of that machine can’t grind up the inconvenient facts, and real dangers of the Internet tax legislation supporters hope to slip through Congress.

Neither the amendment they passed today nor the Marketplace Fairness Act is about ‘leveling the playing field.’ If it were, the legislation would require brick-and-mortar retailers to ask their customers where they live and remit taxes to each of their home states. That would be a terrible burden – the same type of burden big box stores would heap upon small online sellers in an attempt to get a leg-up on their competition. Nor is this effort about tax simplification; those standards have been weakened as the bill has evolved. Computer software won’t magically eliminate this extra sales tax compliance load, any more than it can for income taxes.

Lawmakers claiming to be taxpayer advocates had no business backing this amendment, which opens the door to a host of threats to taxpayers. These include erosion of the Constitution’s ‘physical presence’ standard that shields citizens from unaccountable out-of-state tax collectors, and diminished competition among states to keep their taxes moderate. We are not alone in this view; earlier this month a ‘who’s who’ of 16 conservative organizations warned that MFA was ‘bad news for … the cause of limited government.’ Polls asking the question fairly show that the more they understand MFA, the more stridently citizens oppose the bill. They will not walk away from this fight simply because of a cleverly engineered parliamentary maneuver.

As voters catch on to MFA’s flaws and the real agenda behind it, they won’t take kindly to politicians, who have opted to undermine Internet freedom, taxpayer protections, and the constitution’s limitations on government power. Fortunately, elected officials do have a better tax policy path forward – one that respects the Constitution, truly treats all businesses fairly, and preserves the federalist principle of tax competition. Congress can still reject MFA and instead consider concepts like origin sourcing, which would have every seller remit sales taxes only to the jurisdiction in which they’re located. If they won’t take sensible paths like this, their constituents  may just show them another one: involuntary retirement.