Before the Senate passed its first budget in nearly four years, Sen. Mike Enzi (R-WY) proposed an amendment — the Marketplace Fairness Act — that would make it easier for states to collect online sales taxes. Despite the numerous policy and constitutional issues this bring, the amendment passed by a vote of 75 to 24.
Ron Paul, who didn’t seek re-election last year and serves as chairman of Campaign for Liberty, explained last week that the Marketplace Fairness Act — what he calls the “Internet Tax Mandate” — is another example of big business working with the government to get special favors:
The Internet Tax Mandate also violates the original purpose of the Commerce Clause, which was to guarantee free trade among the states. Instead, the bill would allow states to levy taxes on goods crossing into their state, which is not what the Founding Fathers intended. Why should California be able to force a business in Texas to collect and pay California sales tax?
When considering any economic proposal, the unseen, potential ramifications must be examined. This mandate could discourage online commerce and stifle the growth of new businesses, exactly the opposite of what we need if we want to expand entrepreneurship and revive our economy. In addition, the long arm of Big Government would reach for companies operating in states currently lacking a sales tax.
Those brick-and-mortar businesses worried about competition from the Internet marketplace and wanting to “level the playing field” should instead focus on ways to decrease the burden of regulations and lessen government’s effect on a company’s bottom line. Reduced operational costs can lead to more competitive prices.
The National Internet Tax Mandate provides yet another example of the corporatism so prevalent in the “solutions” legislators are quick to propose—big business getting together with Big Government to step on the taxpayers and smaller competitors—and should be soundly rejected by those interested in restoring a vibrant economy.
Many governors support the Marketplace Fairness Act because it will help them bring in more revenues during cash-strapped times. Traditional brick-and-mortar retailers want it for protectionist reasons. But the Marketplace Fairness Act would turn online retailers into tax collectors regardless of whether or not they have a physical presence in the state of the consumer. Jim DeMint calls this a form of “taxation without representation” — and he’s right.
The good news is that the Senate and House are unlikely to reconcile their vastly different versions of the budget, which means the Marketplace Fairness Act is probably dead, but that doesn’t mean that revenue-hungry governors aren’t going to continue to push the issue.