GOOD NEWS! (…not really.) Congress is legislating a brand new path to fairness! The Marketplace Fairness Act.
States could force Internet retailers to collect sales taxes under a bill that overwhelmingly passed a test vote in the Senate Monday.
Under current law, states can only require stores to collect sales taxes if the store has a physical presence in the state. As a result, many online sales are essentially tax-free, giving Internet retailers a big advantage over brick-and-mortar stores.
The bill would allow states to require online retailers to collect state and local sales taxes for purchases made over the Internet. The sales taxes would be sent to the states where shoppers live.
The Senate voted 74 to 20 to begin debating the bill. If that level of support continues, the Senate could pass the bill as early as this week.
Supporters say the bill is about fairness for businesses and lost revenue for states. Opponents say it would impose complicated regulations on retailers and doesn’t have enough protections for small businesses. Businesses with less than $1 million a year in online sales would be exempt.
"I like marketplaces and I like fairness. This must be good," Stu joked after Glenn announced the new bill.
The Marketplace Fairness T̶a̶x̶ …er… Act, is designed to "level the playing field". That's the progressive way of saying, 'lowering the level of competition, thereby hurting the consumer.'
Sure…a lot of people are describing this legislation as an "internet tax," but don't pay attention to that, if it's fairness, it much be good!
What does this really mean for the marketplace and you the consumer? Last night on Real News the panel took a closer look at what the implications are for the free market.
According to Reason Magazine columnist Veronique De Rugy, "this type of bill is only fair for the people who think that government should be able to maximize tax revenue." She continued to say that, "from the consumer perspective, what this would mean is that effectively you would be in a state of tax harmonization. It wouldn't actually matter where you buy anything, and whether you buy it in your state or online for tax reasons. You would always be subjected to the rate of your state. That is tax harmonization."
While "tax harmonization" may sound like a good thing, De Rugy went on to describe tax harmonization as "tax imprisonment".
"I think it is terrible for competition. We know that competition forces companies and states to actually compete and treat the consumer better, because consumers have a choice."
This legislation has been fought against by free-market conservatives for nearly 15 years. But, as Buck points out, if Congress does pass the law, there is no constitutional argument because this is interstate commerce and within the boundaries of power of the federal government.
One of the most notable aspects to the proposed "internet tax" is that it's a blatant tax-grab. Currently, there are a LOT of problems with the tax code. None of those problems is interstate tax evasion.