Marketplace Fairness Act

The Specter of Internet Taxation

As the U.S. Postal Service closes 53 processing plants to trim $2 billion from its bloated budget, government officials - who earlier floated ideas to suspend Saturday service - look for other ideas to balance their budget. While USPS handles 40 percent of all the mail delivered in the world, it lost $15.9 billion last year with revenues of $65 billion. What’s more, its unfunded pension liabilities are nearly $50 billion.

Instead of privatizing the postal service - which would allow it to compete with FedEx and UPS, who seem to be able to make profits even up against a subsidized postal service - a California city councilman is proposing a tax on email as a fix:

Berkeley City Councilman Gordon Wozniak brought up taxing emails during a recent council meeting. He suggested the money collected, which would be part of a wider-reaching Internet tax, could be used in Berkeley’s case to save the local post office.

“There should be something like a bit tax,” he said during the March 5 meeting. “I mean, a bit tax could be a cent per gigabit and they would make, probably, billions of dollars a year.”

Plus, he said, there should be a “very tiny tax on email.”

Taxing Internet Purchases is a Bad Idea

Amazon.com

We’re seeing more and more efforts to push for taxes to be collected on Internet purchases. Articles on this topic have been popping up all over the place lately (here, here, and here). The push makes sense in some minds. States with revenue issues need more revenue, and the Internet is the great untaxed frontier. (States with revenue issues more likely need a better fiscal policy more than they need added revenue, but that’s a huge topic for another post.)

You probably don’t have to wonder too much about whether or not I’d support the idea of taxing internet purchases. I’d oppose it primarily on the grounds that taxes are already too high, but there are other considerations as well. South Carolina’s Senator Jim DeMint addressed the issue recently and made the point that taxing Internet purchases would be unconstitutional:

Make no mistake: the online sales tax would be another unconstitutional mandate. If MFA [the Marketplace Fairness Act] becomes law, politicians in Washington would give California the right to force a business in another state to collect and pay California sales taxes.

Rand Paul and Ted Cruz to Harry Reid: Stop playing games with the bipartisan Internet Tax Freedom Act

There’s a little bit of good news out of the Senate. Well, at least for now. The upper chamber will move on a short-term extension of the Internet Tax Freedom Act to keep state and local governments from taxing access to the World Wide Web:

Senate Democrats are gearing up to pass a short-term extension of a moratorium on Internet access taxes, according to aides and K Street officials.

The Internet Tax Freedom Act expires on Nov. 1, and Democratic leaders are pushing to extend the moratorium through 2014.

A vote on the short-term extension could come as soon as next week, or when lawmakers return to Capitol Hill after their August break, a Democratic aide said Wednesday.

The bad news, however, is that supporters of the so-called “Marketplace Fairness Act,” the Internet sales tax, are still going to try to attach the measure to the extension of the Internet Tax Freedom Act (ITFA) after the mid-term election. Check out the Orwellian-style doublespeak from this Internet sales tax crony:

Outside supporters of the Marketplace Fairness Act insisted Wednesday that the short-term Internet access measure wasn’t a setback. Lawmakers have little interest in telecom companies potentially noticing rate increases shortly before November’s election.

“No long-term extension of ITFA will occur without MFA because it’s important to keep the Internet tax-free and protect local jobs,” the Marketplace Fairness Coalition said.

There was a huge win for the Internet yesterday, but now crony senators are pushing the Obama-backed online sales tax again

Fresh off a victory in the House of Representatives to keep the Internet access tax-free and promote innovation online, consumers may now have to brace for another push in the Senate for the so-called “Marketplace Fairness Act,” a crony measure backed by brick-and-mortar retailers that would allow states to impose online sales taxes:

Senate supporters believe they have a perfect vehicle [for the online sales tax bill]: the Internet Tax Freedom Act, a relatively uncontroversial measure, which sailed through the House on Tuesday, that would extend a long-standing ban on state and local taxes on Internet access.

“Why wouldn’t we?” Sen. Mike Enzi (R-Wyo.), a longtime supporter of online sales tax legislation, said when asked if he planned to attach the Marketplace Fairness Act to the bill. “They’re a perfect fit.”

Enzi and several other senators released their new bill on Tuesday, which would attach the online sales tax measure to a 10-year extension of the Internet freedom bill. The House passed a permanent version of the online access bill on Tuesday.

Today in Liberty: Trey Gowdy destroys Lois Lerner, Republicans push Internet sales tax again

“How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.” — Adam Smith

— KathLOLn SebLOLus: In case you haven’t heard, our dear Health and Human Services secretary has called it quits. Sebelius recently submitted to her resignation to President Obama, apparently in early March. He’s expected to, at some point today, appoint OMB Director Sylvia Burwell to succeed Sebelius.

House to hold hearings on Internet sales tax

The issue seems to be dead going into 2014, but some House Republicans — those who seem determined to find a way to raise taxes — are planning to hold hearings on the Internet sales tax early this year:

House Judiciary Committee Bob Goodlatte plans to hold a hearing in the first half of the year to explore online sales tax legislation, advocates say.

Proponents of an Internet sales tax bill, such as major retailers, are holding out hope for action in the House in 2014 despite the opposition of many conservatives and the skeptical stance of Speaker John Boehner (R-Ohio).

Supporters and opponents of online sales tax proposals are focusing their lobbying energy on Goodlatte (R-Va.), who has released a set of seven principles that an online sales tax bill would have to meet in order to be considered by his committee.

“House Judiciary has a busy schedule,” but Goodlatte has plans to hold a hearing on Internet sales taxes in the first half of the year, according to Steve DelBianco, executive director of NetChoice, which represents Facebook, Yahoo and online sales tax critic eBay.

High-powered lobbyists representing the interests of large brick-and-mortar retailers were able to ram the Internet sales tax through the Senate last May through the Orwellian-sounding Marketplace Fairness Act.

House Republicans warming up to Internet sales tax

Bob Goodlatte

After sitting on the Internet sales tax since in passed the Senate in May, House Republicans may be ready to move forward on the issue in the coming weeks, despite public opposition, as they will draft their own measure to enact what is unquestionably a tax increase:

House Judiciary Committee Chairman Bob Goodlatte (R-Va) is expected to release his own set of principles on the issue in the next week or two, according to sources who are closely watching the legislation.

The principles are a sign of fresh momentum for online sales tax legislation after Goodlatte and other top Republicans in the House — including Speaker John Boehner (R-Ohio) — voiced deep skepticism about the Senate-passed Marketplace Fairness Act (MFA).

Goodlatte could have chosen to bury the bill, but his decision to craft the principles shows he is serious about moving some version of the legislation forward.

The principles are expected to be broad policy statements with positions such as maintaining a simple system and not burdening businesses.

The Senate version of the Internet sales tax — the so-called “Marketplace Fairness Act” — would have impose an enormous regulatory burden on small businesses, making them tax collectors for more than 9,600 jurisdictions. The measure would also lead to higher prices for consumers.

Poll shows bipartisan opposition to Internet sales tax

The push in Congress for the Internet sales tax may have died down some since the measure cleared the Senate back in May, but a new poll shows bipartisan opposition to the proposed measure currently stalled in the House.

The poll, commissioned by the R Street Institute and the National Taxpayers Union (NTU), found that 57% of likely voters oppose the Internet sales tax, known in Congress as the “Marketplace Fairness Act.” Only 35% support the measure. Those numbers are mostly inline with a Gallup poll released on the issue in June.

Opponents of the legislation, which is being pushed by brick-and-mortar retailers and revenue hungry state governments, point out that the tax isn’t fair at all to online retailers. They note that the measure will impose an enormous regulatory burden on small businesses, making them a tax collector for more than 9,600 jurisdictions, and lead to higher prices for consumers.

The R Street/NTU survey also shows that nearly 66% of Republicans, 56% of independents and a plurality of Democrats oppose the Internet sales tax. Among ideologies, 65% of conservatives and 55% of moderates oppose the measure. A plurality of liberal also opposed the measure, at 47/45, though that was in the polls margin of error.

Poll: 57% of Americans oppose Internet sales tax

The so-called “Marketplace Fairness Act,” the Internet sales tax proposal that has already passed the Senate and is currently stalled in the House, isn’t all that popular among Americans.

According to a new poll from Gallup, 57% of Americans oppose the Internet sales. The strongest resistance to the tax comes from adults under between under the age of 29.

“Americans, by 57% to 39%, say they would vote against a law that would allow each state to collect sales taxes on purchases its residents make online over the Internet,” noted Gallup, which conducted the poll between June 15-16. “Young adults voice the most widespread opposition to such a law.”

The proposal, which is being pushed by traditional retailers, would allow state governments to collect taxes from online retailers, even if they don’t have a physical precense within its borders. If passed, the the Marketplace Fairness Act 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 last month at Reason, “not to mention all the misunderstandings, disputes, and hassles that fall short of an audit.”

Reason Chats with Rep. Thomas Massie, a Liberty-Minded Republican

Thomas Massie

Nick Gillespie of Reason TV recently sat down with Rep. Thomas Massie (R-KY), who is one of the new libertarian-minded Republicans in the Congress, to discuss a number of issues, ranging from his support of the Keystone XL and his opposition to expansive government surveillance and the so-called “fiscal cliff” deal that was passed earlier this year.

On Keystone XL, which was recently approved by the House, Massie explained that he voted to support the project because he “thought that the government was trying to hold up the project.

“I sit on the committee that marked up the bill, and so I got a chance to hear the amendments that the Democrats offered,” explained Massie. “They had some good points, but most of their amendments were designed to kill the bill. I wish they had offered amendments that were actually constructive.”

Gillespie asked about passing more laws to protect Americans from onerous and overreaching proposals like CISPA and other forms of government surveillance. Massie said that Congress doesn’t really need to pass new protections because the Constitution already protects the rights of Americans.

“A lot of what I see Congress grapple with here is the introduction of new technology into society and trying to resolve that with existing laws. I don’t necessarily think we need new laws, we need to respect the Constitution,” Massie told Gillespie. “So just because we have a new type of technology like the Internet or drones, for instance, doesn’t mean that all of our constitutional rights have to go away. As Congressmen we have be sure that they’re preserved even with the advent of new technology.”


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