Top 10 bogus arguments for the Marketplace Fairness Act

Whenever there are tens of millions of dollars worth of lobbying muscle behind a piece of legislation, folks seem willing to say just about anything to make a case for it. The Marketplace Fairness Act, the misguided legislation to allow states to enforce their tax laws on out-of-state businesses, is but the latest example. Here are the top 10 bogus arguments in favor of the bill.

Not really a great article, because if you are going to refute "bogus" arguments, it would help not to make glaring errors.

For example, from the first argument:

Powers that we, the people, grant them in order to provide public goods and achieve certain goals. Powers that absolutely should NOT include taxing businesses outside their borders. That is one “right” that states pretty explicitly do not have, as the genesis of Congress’ Commerce Clause power was specifically to prevent states from engaging in damaging attempts to expand their power in such a way.

The marketplace fairness act does NOT impose any taxes on businesses outside the borders of a state. It imposes a regulatory burden, that of COLLECTING the taxes that are legally due from the customers of the business, to the state in which those customers reside.

The 1st argument does make a solid but useless point that states do not have "rights" in the sense of having the "right" against citizens. It is about power, but it is about the federal government granting states, through the power given the feds from the commerce clause, the power to get out-of-state businesses to help collect the taxes the states have the rightful power to collect from their own residents.

From argument 2:

Supporters often say that the MFA exists to close a 20-year old “Internet loophole,” to stop government from “picking winners and losers” among different types of retail businesses. But there is no loophole and government isn’t attempting to advantage one type of business over another.

Kind of a straw-man. It isn't a loophole -- I've certainly never thought of it that way. The law aids in the enforcement of current tax law. It is the inability of states to enforce a "use tax" that skews the market in favor of out-of-state online companies -- which is clear from all the people who purchase online who are up in arms over this law. They might want to argue that there is no competitive advantage in the current situation, but the fact they don't want out-of-state companies to collect the tax they owe directly refutes their argument.

From point 3:

Once MFA closes this “loophole,” supporters say, we’ll have a truly “level playing field” among different types of retailers. The opposite is actually true. If MFA were to pass, sales made in brick-and-mortar establishments would continue to have tax collected by the simple system they enjoy today: tax is collected based on the physical location of the business, not the residence of the consumer. Meanwhile, for online sales, tax would have to be collected by a dramatically more burdensome system whereby the retailer must quiz the customer about their residence, look up the appropriate rates, rules, and regulations in place in that jurisdiction, then collect and remit those tax dollars to a distant authority to which they’d be subject to audit and enforcement authority.

This "answer" ignores the premise of the argument. The government has no purpose to "level a playing field" between different types of businesses. What it DOES have an interest in is making the government intrusion equally irritating for all. If this law would pass, then any company that wanted to get an "easy" sales tax collection job could simply open up a business in the state. It would be their choice. Nobody HAS to sell on the internet. Meanwhile, ANY store, including my local brick-and-mortar shop, will have to do the same tax collection by address for ANY sales they make over the internet. All internet companies will be treated equally.

But the real problem with this argument is the ridiculous claim that determining the tax will be some huge burden. These are INTERNET sales; they come over a computer, and they come with an ADDRESS because you need to know where to MAIL the item purchases. The same computer program that allows the purchaser to enter their information will easily calculate the tax based on the address.

I won't go through every one. But item 6 is a good one:

The challenge inherent in complying with tax rules in 9,600 taxing jurisdictions is not in doing the math. We’ve had the computing power to do that for 50 years. The challenge is in deciding how an item gets categorized for tax purposes.

This might have merit, if it wasn't for the fact that there are already thousands of businesses successfully doing this every day. Walmart, Target, Bed Bath and Beyond, Barnes and Noble, and ANY brick-and-mortar shop that has gone "online" is already categorizing and calculating sales tax for all jurisdictions based on products. And with the simplification required by the law, this will only be easier. And it is all computer-based. The computer program will take SKU numbers and tell you the tax based on address. For a computer, finding the right tax for 9600 different look-ups is no harder than finding the right tax for 1.

The last point is right but irrelevant:

This makes for some terrific rhetoric, but it’s laughable to say that Mom-and-Pop stores are the driving force here.

The driving force is big business, because they have the money. A mom and pop store can't afford to lobby, even though they are the ones that suffer as much as any from the tax enforcement burden.

I wouldn't make the 10 arguments this article tries to refute.

I make one argument -- every state with a sales tax has a use tax, requiring every person living in the state to pay the same tax on online purchases as brick-and-mortar purchases. BUT, it is nearly impossible to ENFORCE this, just as it is impossible to enforce most laws if there are not people who have an interest in reporting crime.

And the real problem is that, in the last generation especially, people have completely lost their moral bearings. I can't tell you how many good conservative christians here at FR brag about committing tax fraud, and say it is their solemn duty to deprive their own state of the tax that is legally due.

It is because so many people cheat on their taxes that the states are looking to the feds to help them enforce the tax law. And until they do, the people who LOSE OUT are not business, but two groups of people -- the law abiding who file their use taxes, and therefore accept the burden that the law-breakers will not, and the people who buy from brick-and-mortar stores, who are stuck with an increasing tax burden to subsidize the tax cheats who live next door, buy from Amazon, and refuse to pay their taxes.

I don't really care about companies -- I care about the tax burden being spread out equally and fairly across all the people in a state. It isn't fair that some pay tax, while others buying the same items cheat on their taxes.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.