Last week, during a series of Senate votes on the budget resolution, a majority of senators voted for an amendment endorsing the so-called “Marketplace Fairness Act.” The underlying Act has nothing to do with fairness and everything to do with enriching large companies and bloated state governments, while harming small businesses, taxpayers, and consumers.
The National Internet Tax Mandate, as Campaign for Liberty refers to the bill, would impose costly regulations on our nation’s job creators at a time when the economy is still struggling and millions of Americans are out of work. Businesses would be forced to become tax collectors in compliance with thousands of tax jurisdictions, and any increased operational costs would be passed on to consumers in the form of higher prices.
It is unfortunately no surprise that some of the nation’s most powerful businesses are lobbying hard for this legislation. While these companies can afford to absorb the additional burden imposed by this bill, their smaller competitors cannot.
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.