Time to dust off the moldy Supreme Court rulings...
In the days of yore, the Supreme Court held that interstate tariffs are unconstitutional because such is the bailiwick of the Feds not the states.
The Marketplace Fairness Act will impose the sales taxes of the customer's location upon the seller regardless of their location. In effect a federal interstate tariff.
The Supreme Court has also ruled that the law must treat all equally. This is why you can live like a prince on the dole in central Montana and can't buy a Happy Meal with it in NYFC.
The MFA should get nuked just as soon as someone figures out how to get standing.
The problem is the bloody costs while that case slowly works its way up the chain, assuming they can get the Justices to grant certori.
There are already notices on places like Gunbroker, "No Sales to California". Do we want to see that start happening for places like Ebay or Amazon? There are already, "add 4% for payment using Credit Card or PayPal." Do you think a notice saying, "add 25% for sales to California," will increase sales?
It's not intended to increase sales. It's intended as a barrier to entry to new businesses and to prevent businesses smaller than a particular size from getting large enough to be competitive with the established players. Players who are large enough that they have a staff that deals with figuring out sales taxes. Large enough that the staff who's going to be figuring this out have just acquired a new duty rather than hiring someone new to do it. In other words, it's not going to cost Amazon anything consequential to comply with the MFA, but it would have a large impact on, say, an auto salvage yard.
Call your congress critter. Tell them that this is most definitely unfair and even worse will have a deleterious effect on an already weak economy. Tell them that if they are having trouble with finding enough money to pay for programs then perhaps they can try something new, like reducing spending. Ask them how they know that won't work, because they damn sure have never tried it.
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I hate this bill, too, but I can see a couple of problems with the comparison to tariffs.
ReplyDelete1) Sales tax is imposed equally on all qualifying purchases, whether they are in-state, in-store, or in-ternet (sorry, couldn't resist). Tariffs are imposed only on out of state purchases.
b) Currently, you are already legally required to pay sales taxes on goods purchased online from out of state. Every tax season you're supposed to gather your receipts for online purchases that you didn't pay sales tax on, calculate how much you would have paid if you'd bought those items in person in your state, and add that in to what you were supposed to pay in taxes that year (aka, subtract it from your refund). Of course, nobody actually does this, except for tax accountants. This bill doesn't actually impose a new tax, it only shifts the burden of collecting and sending the existing tax from the buyer to the seller.
It's still a bad idea that will kill or cripple many small businesses, but I doubt the courts will will stop it.
At present the taxes (that nobody is collecting) are based on the location of the SELLER. You know what the rules are where you live, they're the same as going to the corner store. You might notice that hardly any state is enforcing their sales tax laws on these sales out of fear that they will stop altogether and the money the seller is making will not be spent locally any more.
ReplyDeleteMost states you can't collect sales taxes until you have a business license and that, in turn, makes your purchases for your business tax exempt.
That does not describe most of the people selling stuff on the internet, does it?
Changing the rules to calculate the taxes on where the BUYER is located and adding in Federal enforcement and collection makes it an uneven Federal Interstate tariff.
The motivation by the people pressing this is the same as places like Massachusetts wanting to tax people for stuff they bought in Connecticut.
"At present the taxes (that nobody is collecting) are based on the location of the SELLER."
DeleteIck. I misunderstood that part, though it only makes the current situation suck more, and doesn't change my opinion of the bill (that it sucks and will kill many small businesses).
Still, I don't know that the courts will do anything about it. It shifts things around, but I doubt it crosses a level that will make the courts willing to overturn it (even though they should).
Yeah, there's so much to hate.
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