April 23, 2013

Congress sure is hard at work at the moment trying to pass one horrific bill after the other. With the disastrous CISPA, aka the “Patriot Act for the Internet,” rightfully getting most of the attention since it represents such a treasonous attack on civil liberties (it passed the House of Representatives last week and now moves on to the Senate), another awful bill is also moving forward that we must all be aware of and fight hard against.  I am referring to S. 743, or the Marketplace Fairness Act (MFA), colloquially known as the “internet or online sales tax bill.” While it is being sold by its sponsors and the Obama Administration as helping brick and mortar mom and pop retailers level the playing field with online retailers, what it actually does in practice is create a bureaucratic tax nightmare and could be the final nail in the coffin for the U.S. economy.  But don’t take my word for it…

A bipartisan group of Senators have written a letter to Harry Reid expressing not only their concerns with the bill, but also outrage at the fact that he is trying to sneak it through without normal committee process.  Here is the letter:

Senators Say Legislation Should Go Through Committee Process

Apr 22, 2013

WASHINGTON, DC – In a letter today to Senate Majority Leader Harry Reid, U.S. Senator Kelly Ayotte (R-NH), along with Senators Ron Wyden (D-OR), Jon Tester (D-MT), Jeanne Shaheen (D-NH), Marco Rubio (R-FL), Mike Lee (R-UT) and Ted Cruz (R-TX), expressed serious concerns that the “Marketplace Fairness Act” (S. 743) is being rushed to the Senate floor for a vote this week – despite the fact that it has not gone through the regular committee process. Last week, Leader Reid used a procedural maneuver to circumvent the committee process and speed up consideration of the bill, setting a preliminary cloture vote for this afternoon.


Dear Senate Majority Leader Reid,

We, the undersigned, urge you to reconsider your decision to expedite consideration of S. 743, the so-called “Marketplace Fairness Act”. As described more fully below, we have a number of substantive concerns with the bill. At the very minimum, we believe these concerns warrant a thorough vetting of the bill through regular order.

Though the official title of the bill references states’ “sovereign rights”, it does nothing but erode them. As you know, the Marketplace Fairness Act would allow states to force retailers that have zero physical presence, in a state outside of their own, to collect and remit sales tax to it. Under current Supreme Court precedent, in the absence of a sufficient nexus, a state cannot reach beyond its borders to compel out-of-state Internet vendors to collect taxes on a particular transaction. This standard is the result of the 1992 decision Quill v. North Dakota, in which the Court held that requiring remote vendors to collect such taxes would place an unconstitutional burden on interstate commerce. By usurping this standard, the Marketplace Fairness Act would undermine an important limitation of the Commerce Clause: the nexus requirement.

Further, the bill will result in crippling compliance costs on small Internet businesses. These costs include not only those associated with the new collection and remittance requirements, but these small businesses will also be on the hook for expensive audits and legal bills if there are any errors in the thousands of tax calculations and distributions they must make every day. At a time of tepid economic growth, Congress should enact measures that are designed to promote innovation and entrepreneurial risk-taking; its priority should not be to look for creative ways to plug state budget holes.

Despite these concerns, S.743 has yet to go through a markup in its committee of jurisdiction. A bill with such constitutional and economic implications deserves nothing less. Again, we respectfully request that you reconsider your decision to expedite consideration of S. 743.


U.S. Senator Kelly Ayotte
U.S. Senator Ron Wyden
U.S. Senator Jon Tester
U.S. Senator Jeanne Shaheen
U.S. Senator Marco Rubio
U.S. Senator Mike Lee
U.S. Senator Ted Cruz

The Wall Street Journal also did an admirable job of describing what a nightmare this bill is.  Here are some excerpts:

Every time Congress has taken a serious look at proposals to boost Internet sales taxes, it has rejected them. That’s probably why pro-tax Senators are trying to rush through an online tax hike with as little consideration as possible.

As early as Monday, the Senate will vote on a bill that was introduced only last Tuesday. The text of this legislation, which would fundamentally change interstate commerce, only became available on the Library of Congress website over the weekend. And you thought ObamaCare was jammed through Nancy Pelosi’s Democratic House in a hurry.

These crooks have no shame.

For Senators curious about what they’re voting on, it is the same flawed proposal that Mike Enzi (R., Wyo.) introduced in February. It has been repackaged to qualify for a Senate rule that allows Majority Leader Harry Reid to bypass committee debate and bring it straight to the floor.

Mr. Enzi’s Marketplace Fairness Act discriminates against Internet-based businesses by imposing burdens that it does not apply to brick-and-mortar companies. For the first time, online merchants would be forced to collect sales taxes for all of America’s estimated 9,600 state and local taxing authorities.

Yep, that’ll stimulate growth.

New Hampshire, for example, has no sales tax, but a Granite State Web merchant would be forced to collect and remit sales taxes to all the governments that do. 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.

Meanwhile, New Hampshire’s brick-and-mortar retailers will bear no such burden. They will not be required to collect taxes on the many customers who drive across the Maine and Massachusetts borders to shop in New Hampshire. Bill sponsors say it would be too big a hassle to force traditional retailers to ask every walk-in customer where they live, but these Senators are happy to impose new obligations online.

As should be abundantly clear, this bill will be a complete and total nightmare for the U.S. economy.  Rather than level the playing field, it will force online retailers to collect taxes that brick and mortal retailers DO NOT HAVE TO COLLECT.  That is insane.  It’s the equivalent of trying to get people back to using buggy whips after the internal combustion engine was invented.

I strongly suggest you contact your Senators and tell them to oppose this bill, as well as applaud those who are resisting it.  They are literally trying to push back the natural evolution of the economy and at the same time complicate the tax code. It’s extraordinarily irresponsible and another great example of why American faith in the Federal government is at an all time low of 28%.

Full WSJ article here.

In Liberty,

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