The increased tax would go to a government-run project known as the E-Rate program, which was ostensibly designed to connect low-income schools to high-speed Internet. Key facts for taxpayers:

• The program isn’t working.  Before the administration rushes to throw taxpayer money at another federal program, it should assess how that program is working.  Schools applying for E-Rate subsidies run into a number of barriers that lead to delays in distributing funds and connecting schools.  Because bureaucratic delays in the program persist for up to a decade, students attending a school when the application was first submitted may never benefit from high-speed Internet access.

• Wasted Taxpayer Funds. Because of the cumbersome process, there is over $5 billion of taxpayer money in the E-Rate account sitting unused

• Private sector solutions. There are private sector programs connecting low-income households much more efficiently and at no cost to taxpayers. For example, in under two years Comcast’s Internet Essentials program has connected more than 900,000 low-income Americans to low cost high-speed Internet.

The Obama administration should focus on making government more efficient instead of tacking on yet another tax onto Americans’ cell phone bills.

• Online retailers and manufacturers already are required to pay sales taxes in the states in which they have physical presence, or nexus. The new bill would require companies to collect sales tax on their behalf even without nexus, resulting in up to 46 state sales tax audits every year.
• The letter outlines two scenarios of how the law will affect sellers, both equally problematic. General issues for everyone include the substantial time it would take to process these audits and compose monthly reports, as well as the heavy costs of obtaining the proper software and integrating trained personnel.
• The first scenario addresses manufacturers who sell to retailers and directly to consumers. These manufacturers would be subject to the same compliance and audit burdens as other retailers in every single state that applies. Pro-MFA legislators have even introduced a myth of “free software by the states.” Since every state can pick its own software, this means that a company will have to sign up with a paid service to deal with 45 different versions of tax software.
• The second scenario addresses true-wholesale manufacturers who do not sell directly to consumers, and instead only serve retailers. Their audit risk jumps up to 4500%. With the MFA, they would be subject to the same audit risks as retailers, and would need to prove that their sales are “properly exempt sales.” Their exemption certificates better be on file—if the MFA is passed, they will be audited.

Digital Liberty encourages you to take action and let Congress, as well as your state and local governments, know how the MFA will do nothing but harm online businesses. Spread the word of the MFA’s headaches and hard costs. This bill has already passed the Senate—we need to make sure the House shuts it down!

Read the letter here.

Marketplace Fairness Act supporters claim “showrooming,” the act of trying out a product at a store before buying it online, harms brick-and-mortar businesses. In reality, as Scrapbook.com CEO Drex Davis explains, consumers are more likely to do the opposite.

Click the image below to listen to Davis' explanation of this myth:

The Marketplace Fairness Act would essentially turn online business owners into tax collectors for 9,600 localities. Eli Katz, CEO of TheEmob.org, warns that this will cost businesses valuable time and energy.

Click the image below to listen to Katz' explanation of the problems with "free" software: