Setting the Record Straight On Internet Sales Taxes

Aug 7, 2015 by AFP

Last week, State Representative Kelly Linck (R-Flippin), wrote an op-ed to the Democrat-Gazette criticizing AFP’s stance against an Internet sales tax. AFP State Director David Ray had previously written an op-ed that was critical of a proposal in Congress to enact an Internet sales tax. This week, AFP State Director David Ray submitted the following letter to the editor responding to Rep. Linck’s arguments:

Last week, State Representative Kelley Linck (R-Flippin) penned an op-ed that defended his support for an Internet sales tax, a misguided proposal that contains huge logistical, economic, and Constitutional flaws.

First, Rep. Linck claims small businesses will receive “free” software to process this new Internet sales tax. Anytime a politician tells you something will be “free,” you’d better reach for your wallet. Estimates from the Main Street Alliance estimate that the Internet sales tax compliance software would cost businesses between $20,000 to $300,000 to setup, and $48,000 to $160,000 in annual upkeep.

Another misleading claim is the Internet sales tax won’t cost online retailers a dime. Small business subsist on tiny profit margins, and the Internet has gifted them the ability to reduce costs. By eliminating that small profit margin by adding an Internet sales tax, business will be forced to cut services, raise prices, and lay off employees.

If you’re wondering why Rep. Linck hasn’t just gone ahead and passed his Internet sales tax in Arkansas, it’s because he knows it’s unconstitutional. The Supreme Court ruled in Quill Corp. v. North Dakota that state governments cannot force companies to collect and remit sales taxes unless they have a physical presence within the state’s borders. The Constitution gives the federal government authority to regulate interstate commerce, but it prohibits certain state actions, such as levying taxes that interfere with trade among the states.

There are many ways to improve our nation’s economy. Slipping a higher tax bill into our online shopping cart isn’t the answer.