We’re in the middle of a godawful economic quagmire. Record unemployment. Increased regulation. Anemic economic growth. An impending economic disaster called ObamaCare. The expiration of lower federal income tax rates. An increase in the state’s unemployment withholding rate. Now, some members of Congress — led by alleged tea partier Renee Ellmers (NC-2) and US Senator Richard Burr — have pushed through a bill allowing government tax collectors greater access to the revenues of online businesses. The alleged conservative party has ditched all that talk about spending cuts and is aiding and abetting the expansion of the federal leviathan. Forbes digs into the meat of the “fairness” legislation:
The Marketplace Fairness Act doesn’t impose a federal tax or even a new state tax. Online sellers are already required to collect sales tax from customers in their own states. But under the Supreme Court’s 1992 holding in Quill v. North Dakota, retailers don’t always have to collect.
They must collect sales tax from out-of-state customers only if they have a physical presence (store, warehouse or office) in the customer’s state. Since then, a growing number of states are extending sales taxes to online retailers with in-state sales affiliates. Amazon recently started collecting tax in Pennsylvania, Texas, California and Connecticut and according to the Marketplace Fairness Act website, is now allied with supporters of the bill. eBay opposes it.
Of course. eBay’s bread-and-butter is small, home-based businesses. Amazon is a large corporation with armies of accountants, lawyers, and lobbyists. A TownHall.com columnist lays out a concise conservative argument against this legislation:
1. The bill expands state tax authority – State governments will be able to tax across their borders despite clear legal and judicial precedent arguing otherwise. Plus, in the case of an audit, businesses would be required to settle disputes with out of state revenue boards in out of state courts.
2. The bill saddles small business with bureaucratic red tape – Small businesses would be forced to accommodate over 9,000 highly variable state and local tax codes, collection standards, and remittance schedules.
3. The bill threatens privacy – Business and state revenue boards with a track record of losing private information will have more chances to do so.
Think about all of the info you have to submit each year on April 15. Imagine having to do that for every transaction with Amazon or some other e-business.
4. The bill discourages tax competition — Rather than competing to lower taxes and attract businesses, states will compete to raise taxes on residents of other states.
Politicians LOVE to raise hotel and tourism taxes in their jurisdictions. Yeah. Tax those other people and NOT OUR PEOPLE.
5. The bill imposes bigger and bigger government – The bill will open the door for further government intrusion into the Internet and for states to reach across their borders for other taxes.
At the end of each year, businesses are responsible for sales tax.
Businesses can choose to tax their customers at the point of sale or pay what they owe in sales tax at the end of the year. Businesses, therefore, act as a tax collection arm for the state in which they are located and are the immediate taxpayer, not the consumer. During an audit, it is the business that is responsible for settling any outstanding balances. The state revenue departments do not pursue consumers over individual purchases; the state revenue departments pursue the business.
Use Tax is owed by consumers to the states where they reside, not to the states where they make purchases. The Marketplace Fairness Act would make businesses responsible for collection and remittance of out-of-state consumer purchases. Remote sales tax would force businesses to become sales tax collectors for all states.For example, if a customer in New York state made a purchase from a company based in Virginia, the Virginia business would have to collect New York sales tax from the customer and then send the collected tax back to New York.At the end of the year, if there are disputes over sales tax collection, the Virginia business would be subject to the New York State Department of Taxation and Finance and New York courts.
In order to collect the proposed remote sales tax, businesses would be forced to send personal information about their businesses to a host of state revenue departments, instead of just the one in their home state.
In the case of an audit, businesses would have to demonstrate where purchases came from, which affects customers’ privacy. This opens businesses and consumers up to the very real potential of losing personal information. In South Carolina, for example, hackers gained access to tax return data, including Social Security numbers, of 5.7 million people and 700,000 businesses. […]
Of even greater concern is that a remote sales tax will create competition among states for higher taxes, rather than lower taxes. Currently, states can only tax those consumers who reside within their borders.This “physical presence standard” ensures that the businesses taxed by states have the ability to express their approval or displeasure with state tax code through elections, referendums, etc. This legislation encourages states to collect taxes across their borders from businesses with no recourse.
This legislation is a gross violation of the GOP platform and the party’s tradition of supporting smaller government and less taxation. This is a political dividend brought about by campaign contributions from PACs funded by large retailers. The Internet empowers small home-based businesses to compete in the marketplace with the likes of Wal-Mart. How is it helpful — or “fair” — to drag down and hobble a whole other sector of businesses (especially in a time of economic distress)?
Wal-Mart has the power to hire armies of lobbyists to water-down legislation and carve out exceptions for them. Small e-startups don’t. While intending to create “fairness,” Washington meddlers have ensured the creation of another layer of “unfairness.”