Internet Sales Tax Could Lead to Higher Prices for Consumers

The House of Representatives is taking its time with the Internet sales tax, which is a good thing. They’re allowing it to go through the proper process, unlike the Senate, and that’s giving more time for opponents to make their case against the proposal.

What we already know about the Internet sales tax, absurdly named the “Marketplace Fairness Act,” is troubling. Not only is the proposal constitutionally questionable, it would turn Internet retailers into a tax collecting agents for 45 states and the District of Columbia and more than 9,600 taxing jurisdictions.

“[T]hat’s 46 returns (45 states with sales taxes plus the District of Columbia), which have to be filed monthly or quarterly, and 46 potential audits every year,” wrote Jacob Sullum earlier this month at Reason,not to mention all the misunderstandings, disputes, and hassles that fall short of an audit.”

That is a regulatory nightmare for business, and customers could feel the effects. The Heritage Foundation points to a recent interview by a small business owner who explained that compliances costs will lead to prices increases for consumers:

If the House approves the Marketplace Fairness Act, Villa Lagoon Tile won’t be out of business, but it might be forced to raise its prices.

In an interview with National Public Radio, owners Lundy Wilder and Dave Perry talked about the “tremendous burden” the Internet sales tax will create for their business.

Their custom cement tile company, based in Gulf Shores, Alabama, relies mostly on Internet sales because its Cuban-style tile is more popular in coastal states like Florida, Texas, and Washington.
“It would be more of an administrative nightmare for us than anything,” Perry said.

Perry said his biggest challenge would be complying with the “complications that go along” with the Internet sales tax.

Rep. Thomas Massie (R-KY) is leading efforts to against the Internet sales tax in the House. Massie recently gave a 30-minute speech against the tax in the chamber, during which he explained the regulatory hurdles that businesses would face and noted that it runs roughshod over the concept of federalism.

It’s unclear when the House will take up this terrible measure, but this is an issue that could have a profound effect on e-commerce. If you’re concerned, please contact your representative and ask them to oppose the Internet sales tax when it comes to the floor for a vote.

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