Florida pivotal in Internet tax battle
A misleading piece of federal legislation, called the “Marketplace Fairness Act,” passed the U.S. Senate last year. Contrary to its title, this bill would allow states to impose an unfair burden on Web and catalog retailers by requiring them to collect sales taxes even for states where they have no physical presence. This could force Florida’s online retailers to comply with as many as 9,600 separate taxing jurisdictions across the country, even if their only physical location is here in the Sunshine State.
Despite more than a decade of efforts to simplify sales tax codes nationwide, they remain enormously complex. Supporters of the Marketplace Fairness Act dismiss this by pointing to the existence of software to help businesses untangle the dense web of rules and regulations in each jurisdiction. But software can no more solve sales tax complexity than TurboTax has solved income tax complexity. If the bill were to pass, the result would be heavy burdens on Florida retailers availing themselves of the Internet to expand their businesses.
House Judiciary Committee Chairman Bob Goodlatte, R-Va., held a hearing recently to explore alternative approaches. He’s laid out a set of seven principles, arguing that taxes should be low, neutral and simple, and that any reform should protect vibrant tax competition, states’ rights and customer privacy. The Marketplace Fairness Act arguably violates each of these common-sense standards.
South Florida was well-represented in the hearing, with Democratic Reps. Ted Deutch and Joe Garcia sitting on the committee. If they consult with their constituents, they’ll likely find strong opposition. In a Mercury poll conducted last year, respondents opposed tax policies like those in the Marketplace Fairness Act by a 22-point margin overall. Republicans opposed it by a 39-point margin, independents by nearly 20 points and even Democrats by five points.
In short, the Marketplace Fairness Act is bad policy and it’s bad politics. We’re hopeful that Reps. Deutch and Garcia take that into account as Congress continues its work on this issue.
