Congress is poised to raise taxes again, this time by allowing states to impose sales taxes on online sales. Senators Ron Wyden (D-OR), Max Baucus (D-MT), and Kelly Ayotte (R-RH)―all representing states without sales taxes―oppose the Senate’s “Marketplace Fairness Act” as “taxation without representation.” The proposed legislation would burden online businesses with enforcing potentially thousands of state and local taxes across the country at the point of sale.

Andrew Moylan, senior fellow with the R Street Institute in Washington, D.C., writes, “This means quizzing purchasers about their location, looking up the appropriate rules and regulations in more than 9,600 taxing jurisdictions across the country, and then collecting and remitting sales tax for that distant authority. No brick-and-mortar shop has to do this for in-store sales, and yet every online retailer would have to do it for remote sales.”

In an editorial this week, The Wall Street Journal added: “Small online sellers will therefore have to comply with tax laws created by distant governments in which they have no representation, and in places where they consume no local services.”

Senator Dick Durbin (D-IL) claims tax accounting software makes it easier for smaller businesses to comply with the proposed law than opponents allege. Still, forcing retailers to enforce the tax laws of thousands of different localities across the country is a massive change in the way we do business―one that will have far-reaching consequences for small businesses and consumers alike.

Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Portland program at Cascade Policy Institute.

 

2 Responses to “The Marketplace Fairness Act: Taxation Without Representation?”

  1. Jack April 26, 2013 at 4:01 pm #

    Plus it is unconstitutional; Article 1, Section 9 state that “No Tax or Duty shall be laid on Articles exported from any state.” But since we have no court that is willing to uphold the Constitution it will probably pass and go unchallenged.

  2. Don Crawford May 10, 2013 at 2:24 pm #

    Not only would we have to figure out what the amount of the tax should be, but we would have to keep track of that money, save it up and then transmit it to the various states and cities that collect such taxes. Some we’d have to transmit quarterly and some we’d have to transmit yearly. So we’d have to learn all about the sales tax rules for each and every state and locality. Then there is the filing of sales tax returns for each of those states. That takes just as much time if you sell one item in a state as if you do thousands of dollars of business there. And once you file in a state, then that state requires you to file a return even if you don’t sell anything in that state that year. And we’d have to know which entities were exempt from sales tax in which state and which weren’t and which ones could be if they had the correct documentation which must be kept on file. It will probably cost more to comply with than we would send in. And of course it will hurt us small companies more than the big ones even though we do (or used to do) the most hiring, and so hurting us will hurt employment. There needs to be something to balance the ease of passing more laws against the burden they impose on citizens.

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