Digital Liberty's Katie McAuliffe wrote an opinion for Forbes, citing some serious legislative trickery by some republican governors. Many governors and state legislators claim that unless the Marketplace Fairness Act passes, they will continue to lose out on millions of dollars in uncollected tax revenue from sales made by online retailers located outside of their state. The truth is they’ve inflated the numbers of just how much revenue they’re losing by creating a tax loophole just for Amazon – a tax loophole that’s going to expire in four months for the majority of states. In order to persuade Amazon to set up warehouses in their states, the states allowed them to temporarily ignore the requirement that they collect sales tax once they established physical nexus in their states.
McAuliffe writes;
“A number of states exempted Amazon from collecting sales tax before or after it established physical presence in order to get the retailer to build distribution centers in their states and create new jobs. The majority of those sales tax exemptions expire in January 2014. By not collecting taxes from the nation’s largest online retailer, these states knowingly created a false sense of urgency to the pass the MFA…
"Gallup polling data indicates online sales tax is a losing issue for lawmakers and candidates. Fifty-seven percent of Americans oppose a law that would allow each state to collect sales taxes on purchases made online, compared to 39 percent in favor. It’s an even tougher sell to younger voters: 62 percent of those ages 30 to 49 and 73 percent of 18 to 29-year-olds oppose an online sales tax.
"States are leveraging their self-imposed tax collection delay to pressure Congress to pass a misguided law that would allow state regulators and tax collectors to reach across state lines in search of bigger cash cows, such as business income taxes. Their ultimate goal is to export their tax and regulatory burden to Americans who have no recourse at the ballot box. A politician’s dream come true."
The MFA imposes an unfair tax collection burden on online retailers to collect sales tax for states in which they have no physical presence. These states made a choice to forego sales tax revenues to lure in a big business, and now they expect small businesses to suffer for choices made by states they can’t vote in. The Marketplace Fairness Act isn’t about “leveling the playing field” or giving states taxes they need and deserve; it’s about vastly expanding the powers of states beyond their borders.
The full article can be found here.