Washington — Last week, the Marketplace Fairness Act (MFA) was reintroduced in the Senate by Sen. Dick Durbin (D-Ill.), Sen. Lamar Alexander (R-Tenn.), Sen. Mike Enzi (R-Wyo) and Sen. Heidi Heitkamp (D-N.D.). The bill, like its previous incarnations, would force online retailers to collect sales and use taxes regardless of physical presence. It would do so without addressing any of the serious small business concerns, such as the burden of having to collect taxes for almost 10,000 tax jurisdictions, and the risk of audits across state lines. While spring is usually thought to be a season of hope and new beginnings, this bill signifies a futile turn back to a retrogressive approach that would scapegoat and penalize innovation.
Since last year, the House Judiciary Committee, under the leadership of Chairman Bob Goodlatte (R-Va.), has been discussing ways to address these small business concerns. However, in introducing a bill so similar to its problematic predecessors, MFA proponents have shown their disinterest in finding a way to actually adapt an outdated tax system to better match the new reality of the online marketplace. Instead, they insist on the MFA and its punitive targeting of online retailers to dump the burden of collecting sales taxes for a geographically based system on innovative sellers whose business models are not geographically based. Perhaps it was sadly predictable that those who see holding back innovation and forcing the 21st century economy to conform to a 20th century tax system as “leveling the playing field” would be incapable of having the flexibility to entertain any alternatives to their approach.
Our industry understands the desire of state and local governments to collect online sales and use taxes. However, they need to understand that they cannot simply dragoon small online retailers into collecting it for them, while themselves evading their responsibility to address a fractious and chaotic tax system. There is nothing fair about the Marketplace Fairness Act. Rather, it is a manifestly unjust attempt to make small business innovators pay for daring to succeed in the online marketplace. The Marketplace Fairness Act title remains about as descriptive as the Holy Roman Empire, which according to Voltaire was neither holy, nor Roman, nor an empire.