Small-Government Group Now Stumping For Harry Reid’s Internet Tax

Michael Schaus
Posted: Aug 02, 2014 1:01 AM
Small-Government Group Now Stumping For Harry Reid’s Internet Tax

In the beginning, there was nothing. Then, Al Gore created the internet; and soon there were entire businesses using the interwebs for commerce and profit. We really should have known that it was only a matter of time until DC insiders tried to squeeze a little more tax revenue out of that particular free-market innovation.

The Market Place Fairness Act (AKA: Small Internet-Business Death Sentence) is making a comeback. After Harry Reid managed to pass the punitive tax bill through the Democrat controlled Senate, some Beltway wonks are now trying to resurrect support for it in the US House. And, sadly, the sales pitch for bigger government is getting an audience from traditionally conservative groups. Alleged defenders of limited government have, apparently, gotten on the “tax internet businesses” bandwagon.

Nathan Mehrens, president of Americans for Limited Government, wrote a lengthy op-ed about stopping government from picking winners and losers (by hiking taxes on millions of small internet-based businesses). Heck, even Art Laffer has stumped for burdening internet retailers with sales tax collection requirements.

I know, I know… Why should Amazon, or Ebay, get away without paying tax while Mom and Pop’s little shop has to shell out money to the state, county, city, and municipality, right? Well, for starters, that’s a pretty flawed question. Online retailers already pay taxes for the jurisdictions in which they have a physical presence. The Market Place Fairness Act, however, would stipulate that online retailers collect sales taxes for the local jurisdictions of their customer’s residence.

Now, if we’re talking about “leveling the playing field”, I would like someone to explain to me how this piece of legislation does that. What is “fair” about making online retailers comply with up to 10,000 local tax codes? Can you imagine the chaos at the cash register if your local grocery store was forced to collect taxes for the local government indicated by the address listed on your driver’s license?

Of course, this burden of tax-compliance is conveniently glossed over ignored by our willfully ignorant “conservative” champions who are (in effect) stumping for Harry Reid. Mehrens wrote about the “advantage” online retailers have by not being forced to comply with any, and every, taxing authority in the United States.

This obvious advantage for out-of-state retailers comes from the U.S. Supreme Court decision in Quill v. North Dakota, holding that while such taxes could be levied, they could only be done so if Congress authorized it under the Constitution’s Commerce Clause.

Um… Basically, that sounds like the court is under the impression that the Constitution’s Commerce Clause actually protects interstate commerce from unnecessary government burden. Whoa. One would almost think a small-government advocate would already know something like that. But, he went on:

While I have met very few voters who enjoy paying taxes, I’ve met even fewer who believe the tax code should only apply to some of us. When presented with the facts—instead of misleading rhetoric—most voters believe in fair play and want every business to have a shot to compete in the free market without the government picking winners and losers.

Okay, those are fighting words. The tax code does apply to all of us. If Mom-and-Pop’s hardware store decides to start shipping their products to customers who live in a different state, they are treated exactly the same as any other business… And they’re not required to start collecting taxes for jurisdictions that are tens, hundreds, or even thousands of miles from their store. It almost seems like the “misleading rhetoric” is coming from the folks who claim they are imposing “fairness” by placing an unconscionable burden on a select group of retailers.

And then he goes for the jugular:

For those who favor free enterprise and Federalism, passing this legislation should be a no-brainer.

First of all, granting nation-wide taxing authority to local jurisdictions is hardly Federalism. Allowing some obscure county in North Dakota the authority to tax a business located in Providence, Rhode Island – merely because a North Dakotan ordered some Dexter DVDs online – is hardly the definition of state sovereignty or free enterprise.

Second of all, since when do limited-government advocates fix alleged tax inequities by arguing for increased tax burdens? I mean heck, the first clue that the Market Place Fairness Act is antithetical to the philosophy of small government is that it was passed by Harry Reid’s Senate. Do you really think Harry just let some small government, Federalist, piece of legislation slip by on accident? Is Nathan really making the argument that in order to make things “fair”, we should increase the burden on American businesses who have found an effective way to reach geographically distant markets?

Free market, low tax, conservative, Federalists really shouldn’t be too excited about increasing the tax-compliance cost for any business group. Only big government liberals, like Harry Reid, would think that “fairness” can be accomplished by making 74,000 pages of tax code even more complex for small businesses.