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Tell Your Senators to Oppose an Internet Sales Tax

Dear FreedomWorks member,

As one of our millions of FreedomWorks members nationwide, I urge you to contact your Senators and urge them to oppose S. 336, the Marketplace Fairness Act.  Introduced by Senator Michael Enzi (R-WY), this bill would require online retailers to collect sales taxes when shipping to states in which they have no physical presence.

The judicial precedent set by Quill Corp v. North Dakota (1992), as well as the anti-discrimination requirement in the Commerce Clause of the Constitution, raises significant questions with respect to the constitutional validity of the bill, and there is a concern that to require a business to pay taxes in a state where it has no physical presence would be an instance of taxation without representation.

Apart from constitutional concerns, the bill would impose a substantial administrative burden on out-of-state retailers, requiring them to keep track of the requirements of thousands of different tax municipalities, while brick and mortar stores have only to keep track of one set of rules. Online retailers are already faced with the cost of shipping their merchandise, and the disadvantage that customers must wait several days before delivery. It is our view that the imposition of a further tax on these businesses serves less to eliminate unfair competition, and more to promote special interests and protect them from the business models of their more efficient competitors.

Furthermore, as a greater number of retailers embrace new technologies, the line between brick and mortar stores and those focused on remote sales has become increasingly blurred. It is not clear how imposing an onerous new requirement on online retailers makes the marketplace fairer with respect to those who also operate in physical locations.

It is our fear that allowing states to collect sales taxes from remote sellers undermines the ability of the states to compete with one another on questions of fiscal policy, and indeed the original purpose of a fiscally federalist government, namely that states act as laboratories to separate those policies which are successful at fostering economic growth from those that fail.

Any increase in the taxation requirements of online retailers will retard economic growth and harm those businesses which have done the most to innovate over the past two decades. In the midst of recovery from a painful and protracted recession, it would be a mistake to enact policies that will reduce consumer spending and impose new regulatory requirements on businesses responsible for creating American jobs.

I urge you to contact your Senators and ask them to take a principled stance against special interest protectionism by opposing the Marketplace Fairness Act, S. 336.

Matt Kibbe
President and CEO

R David L Campbell

Totally disagree. Freedomworks clearly is not an online retailer, and is not being confronted with the state-by-state efforts already affecting online retailers.

The fact is, absent action by Congress, online retailers (large and small) are already being ensnared by states trying to do this on their own.

The proposed legislation is a step in the right direction! It says that if a state wants to require an online (remote) retailer to collect their sales tax (such tax being legitimately approved by their voters 50+ years ago in most states), then those states should be required to simplify their laws, make it very easy (free) for us to comply, and indemnify us from errors.

I would have expected freedomworks to support efforts to make government more efficient, allow states to be more autonomous.

The proposed legislation does NOT create new taxes. Better still, it could reduce a significant tax evasion problem which is distorting local retail markets accross the country in favor of online retailers.

While I don't like taxes, I get more frustrated when the sales tax I approved (to fund my schools and fire departments) is not collected by an online retailer, and the my property taxes go up to compensate for the unexpected shortfall in sales tax revenue.

Freedomworks was supportive of making government more efficient and minimizing tax burdens in the past. What has changed?