Update: 9PM,EDT 05/06/13: The vote held today in the Senate PASSED 70 to 24, with 6 not voting. Here is the breakdown of who voted, and how.
The Marketplace Fairness Act of 2013 is up for vote in the US Senate today. Typically, if someone purchases an item from a website that is outside the customer’s home state–and the seller does not have business operations in that state (called “nexus” in retailer parlance), the seller is not required to charge and collect sales tax on the purchase. A little-known, followed or enforced subtitle to that “nexus” situation, is that if the retailer does not collect the tax, the customer is supposed to report the purchase on his personal state tax return (or, in some states, file a separate “use tax” return), and pay the required sales tax for his/her jurisdiction. Some sources claim that fewer than one-percent of shoppers observe this regulation.
The bill (S.743) has broad support from certain trade associations, and high-profile retailers, such as Target, Walmart and Costco, who, to hear them tell it, lose millions each year to online shoppers who can save as much as 9.25% (in Chicago, where the sales tax is highest in the nation) by ordering online. Along with the enthusiasm from big-guy retailers and trade associations, so, too, comes the political juice of the lobbyists who love them.
A rather strange bedfellow is on board with this as well. Amazon.com has historically be opposed to taxation initiatives such as this, going as far as to cancel relationships with affiliates in states that required them to collect tax residents of certain states, because those affiliates constituted “nexus” according to tax authorities. Now, Amazon is in favor of the bill, because they are expanding to a point where they have nexus in so many states anyway that they find themselves on the other side of the issue from their online retailing brethren.
As with most things in government these days, S.743 is not being put forth in the best interest of the people, but in the best interest of the SPECIAL interests. Retailers don’t like the competition, so they are mounting an offensive to have them legislated out of existence.
We have seen this before,in the Food Safety Modernization Act a few years ago (where organic farmers would be required to test and keep complete records of every apple or tomato that leaves their field)–the big guys would too, but it’s a rounding error to them, not the end of a generational way of life. And the so-called “Monsanto protection act” earlier this year.
Special interests jump on causes that annoy them, and they have the paid political muscle to make the annoyance go away.
Back to the Marketplace Fairness Act. You need to ask: isn’t this why the founders put article one in the Constitution, in the first place? Naturally, they could not have foreseen the Internet, but they knew Interstate Commerce would be one of the benefits of this more perfect union, and that to impede interstate commerce made things LESS perfect, not more.
The 1992 “Quill” ruling affirmed this long-held practice. By forcing remote collection on small businesses, you open those businesses up to audits from states they do not have nexus, nor a vote, in.
Passing this measure into law lets states impose their own homegrown disasters on merchants located in states that are thriving. People make the decision to locate their businesses in states where taxation is fair, and fiscal responsibility is exercised. And they make deliberate decisions to stay out of states such as California, Illinois and New York, where
that is not the case.
There are a couple very solid articles on S.743, which we thought you should read. Then, please contact your representatives to voice your opinion in OPPOSITION.
Links:
(links will open in new window)
CNBC: Are You a Tax Cheat If You Shop Online Tax-Free?
US Senate Website: Text of the Marketplace Fairness Act
CNET: Senate set to vote on Internet sales tax
Photo of USA Capital by JColman, via Flickr
