By Christine Harbin Hanson
The House Judiciary Committee will hold a hearing on the internet sales tax this week. Americans for Prosperity strongly opposes this misguided tax on online sales from out-of-state retailers, and we call on Chairman Goodlatte and his colleagues in the House of Representatives to oppose it, too.
Internet sales tax legislation like the Marketplace Fairness Act has economic and logistic problems. Despite proponents’ claim to the contrary, enacting an internet sales tax will have a serious impact on business (particularly small ones) in the form of high costs of compliance. Instead of “leveling the playing field,” this legislation would put online retailers at a disadvantage by forcing them to comply with nearly 10,000 jurisdictions that change constantly.
These bills have serious constitutional problems, too. In Quill Corp. v. North Dakota (1992), the Supreme Court reaffirmed that states cannot force businesses to collect and remit sales taxes unless they have a physical presence, or “nexus,” in the state. Legislation like the Marketplace Fairness Act would violate this decision by giving congressional approval to an interstate compact allowing member states to require out-of-state retailers to collect taxes on remote sales.
The Senate already passed the Marketplace Fairness Act in last session of the 113th Congress. Prior to the vote in the Senate, AFP issued a letter of opposition to the legislation, as well as a key vote alert that reminded senators that the Supreme Court had ruled a similar approach unconstitutional. We were disappointed when the Senate passed it, and we included the vote in our national congressional scorecard. If the Marketplace Fairness Act progresses in the House of Representatives, then it will be dangerously close to the President’s desk for his signature.
Americans For Prosperity is proud to be a longtime participant in a broad coalition of organizations in opposing this problematic legislation. We have signed a number of coalition letters in opposition to the Marketplace Fairness Act as it has worked its way through Congress.