R Street testifies on alternatives to Internet sales tax
Testifying at a hearing on alternatives to S. 743, the Marketplace Fairness Act, Moylan said “origin sourcing” collection standards already in use to collect sales tax for brick-and-mortar sales should be the norm for remote sales as well. By contrast, he noted, “destination sourcing” standards such as those imposed by the S. 743 would undermine basic principles of sound tax policy, impose unequal collection burdens on businesses and constitute a substantial burden on interstate commerce.
“Extending the existing origin sourcing collection standards would ensure that all retail sales are governed by the same straightforward rules, requiring tax collection based on the physical location of the business, not the residence of the buyer,” said Moylan. “This solution also meets Internet sales tax principles laid out by Chairman Goodlatte late last year.”
Moylan also stressed that the Marketplace Fairness Act is extremely unpopular. In a poll commissioned last year by R Street and the National Taxpayers Union to test public attitudes on Internet sales tax issues, 57 percent said they opposed a Marketplace Fairness Act-type of plan.
“No Congress should govern by poll alone, but this data proves that not only is a destination-sourcing scheme like the MFA bad policy, it is profoundly bad politics as well,” cautioned Moylan. “That should send a strong message to this committee that America is engaged on this issue and that only something like an origin-sourcing rule to truly level the playing field can pass muster with them.”