R Street laments Senate passage of so-called ‘Marketplace Fairness Act’

WASHINGTON (May 6, 2013) — The R Street Institute today expressed disappointment at U.S. Senate passage of S. 743, the Internet sales tax bill known as the “Marketplace Fairness Act.”

Passed by a 69-27 margins, this poorly designed bill would allow states to impose tax collection requirements on out-of-state businesses. The bill now moves to a decidedly less hospitable U.S. House of Representatives, where it will be the subject of close scrutiny.

“After a rushed legislative process culminating in only one minor amendment being processed out of the more than 50 filed, the Senate finally passed the misguided Marketplace Fairness Act,” R Street Senior Fellow Andrew Moylan said. “By wiping away geographic limits to state tax authority, the bill would impose serious burdens on Internet retail and undermine basic tax policy principles. It is now up to conservative leaders in the House of Representatives to stop this bad legislation in its tracks.”

Through the process of committee hearings and amendments, the House could explore serious alternatives to the approach enshrined in the Marketplace Fairness Act. One such example could be origin sourcing, where remote retail sales would be governed by the same collection standard that exists for brick-and-mortar sales today: businesses collect for their physical location, not that of their customers.

“An origin sourcing approach could address the concerns of Marketplace Fairness Act proponents while preserving proper limits on taxation, due process rights, and privacy protections for consumers,” Moylan said. “In its haste, the Senate didn’t see fit to design a policy that protected such principles, but the House can take its time and complete real due diligence.”

R Street has been among the foremost opponents of S. 743, spearheading a broad coalition of conservative organizations against the bill and working to educate members on its many flaws. That battle now moves to the House, where Moylan committed to continuing the fight.

“The Senate got it wrong on the Marketplace Fairness Act, but the House has both the membership and the process to get it right. R Street will help them do that by protecting conservative principles and advancing realistic solutions,” Moylan added.


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