Scott Rigell tries to resurrect totally discredited Marketplace Fairness Act
Unfortunately for Rigell, the MFA has run aground because it is fundamentally incompatible with a system of limited government. It would empower states to expand their tax authority beyond their borders to anywhere the Internet exists. In doing so, it would subject businesses in Rigell’s (and my) home state of Virginia to the tax, audit and enforcement authorities from every other sales tax state in the country, including aggressive big-government monoliths like California, New York, and Illinois. Why Rigell would want to give California’s IRS the power to drag his district’s businesses into California courts to enforce their tax laws is a mystery to me.
In the last year or so, the American public has learned a great deal about the bill and it turns out they don’t much like it. In fact, in a poll we commissioned with our friends at the National Taxpayers Union, we found that virtually every subcategory one can think of opposed such a bill by substantial margins.
- Self-identified Republicans and conservatives disliked MFA by 2 to 1 margins.
- Independents opposed MFA by a 56 percent to 37 percent margin, Democrats by a 48-43 percent margin, and split ticket voters by a 58-36 percent margin.
- When respondents were informed “the proposed legislation would allow tax enforcement agents from one state to collect taxes from online retailers based in a different state,” and that it would entail new tax collection obligations for businesses, the margins against it swung to 70 percent and 69 percent, respectively.
- When confronted with the best arguments in favor of the legislation and against it, more than 60 percent of respondents supported the anti-MFA arguments.
I testified last month at a House Judiciary Committee hearing on the Internet sales tax issue and offered an alternative to address the concerns of big-box retail without unwisely erasing borders as boundaries of state tax power and letting loose the hounds of revenue agents: simply extend the collection standard used for brick-and-mortar sales (where tax is collected based on where the business is located) to all remote sales as well. It would create a simple system that wouldn’t unduly burden sellers while keeping appropriate limits on tax power. This is the way to “level the playing field,” as Rigell desires, without providing a cure that’s worse than the disease like the MFA.
