Fw: Internet Sales Tax
- Here's a good rebuttal out of the Maine RLC to the proposed Internet Sales Tax...
Congress needs to hear it!
>Sent: Mar 20, 2013 10:34 PM
>Subject: Internet Sales Tax
>This material is by Maine RLC Board Member Bryan Daugherty.
>The first part is the talking points. The latter part is the Maine action
>resolution, which can be altered by state.
>Internet Sales Tax Myths and Facts
>As discussion continues over proposals like the Marketplace Fairness Act
> which would change the way states can exercise tax collection powers
>over remote sales several myths have cropped up.
>Myth # 1: This is a States Rights Issue.
>FACT: Giving states the power to collect sales taxes across their borders
>isnt about states rights, its about state coercion. Governments would
>have fewer incentives to keep their own tax rates low, eroding the
>important federalist principle of tax competition.
>Myth #2: We need to enact this bill as soon as possible.
>FACT: Theres no good reason to rush into such an enormous and
>controversial tax policy matter. While some have stated this issue has
>been on the docket for almost 10 years, the reality is that there is still
>a lot of work to be done, such as holding hearings on alternatives to the
>Marketplace Fairness Act.
>Myth #3: Online stores enjoy a special loophole.
>FACT: What Marketplace Fairness Act supporters call a loophole is
>actually the physical presence standard, a firmly grounded constitutional
>doctrine the Supreme Court has upheld for decades to protect businesses
>and their customers from predatory tax administrators. The physical
>presence safeguard helps to protect taxpayers from many types of
>aggressive policies that could affect income, property and other taxes.
>Myth #4: The Marketplace Fairness act will level the playing field
>between online and brick-and-mortar stores.
>FACT: While the Marketplace Fairness Act would require remote sellers to
>collect sales tax on every item, it would force them to do so by a
>completely different and harsher set of rules than currently exist for
>brick-and-mortar sales. If the Marketplace Fairness Act were to pass,
>states could strong-arm remote sellers into complying with more than 9,600
>separate sales tax jurisdictions across the country, forcing online
>retailers to quiz each and every customer about their residency
>something no brick-and-mortar retailer is required to do.
>Myth #5: Compliance is easy.
>FACT: Because they would now answer to 9,600 tax jurisdictions across the
>country, remote retailers would have to shoulder heavy overhead costs just
>to meet their new tax collection liabilities. The sponsors even recognize
>this, however imperfectly, through a paltry exemption in the legislation
>for businesses with remote sales of less than $500,000/year. However, a
>2006 PricewaterhouseCoopers study demonstrated that small businesses with
>sales between $1 million and $10 million still face enormous costs that
>would threaten profitability, causing significant harm to interstate
>commerce and the economy during an especially fragile time.
>Myth #6: States need to collect Internet sales taxes to balance their
>FACT: Instead of pursuing one cash grab after another, states need to cut
>spending to get their budgets in order. Some standout states are actually
>enjoying relatively good growth compared to their poorer neighbors they
>are the states that pursued free market reforms, eliminated waste, and
>controlled growth of government to create a competitive economic climate
>that attracts jobs and workers. The Marketplace Fairness Act nullifies an
>important facet of that competition by doing away with the long-held
>physical presence standard for taxation.
>Myth #7: All the Internet retailers support it.
>FACT: There is no consensus among online retailers in favor of
>destination-based sourcing. As is usually the case when government gets
>involved in the marketplace, those who would benefit the most from the
>legislation are lobbying in favor of it, and those who would be harmed are
>working hard to stop it. Nor is the general public clamoring for it. A
>December 2012 Mercury poll of 800 likely voters asked the neutral question
>about whether they supported allowing states to make online retailers
>collect and process sales taxes on Internet purchases based where the
>customer is located, regardless of where the retailer is physically
>located. By a 48 percent-41 percent margin, respondents were opposed.
>When given a more realistic description of the bill, The proposed
>legislation would allow tax enforcement agents from one state to collect
>taxes from online retailers based in a different state, opposition rose
>dramatically: 61 percent to 28 percent.
>Myth #8: This tax is the only, best fix to the problem.
>FACT: Instead of creating schemes that could open-up a Pandoras box of
>unstoppable tax-grabs on the part of cash-starved states on unsuspecting
>citizens, states could move forward with origin-based sourcing sales tax
>plans, where the business charges all customers one rate of tax, based on
>the jurisdiction in which that business is located. If Congress takes any
>action on Internet sales tax collection, it should be in pursuit of
>uniform origin-based sourcing to preserve proper limits to taxing
>authority and encourage tax competition.
>Myth #9: Retail sales on the Internet are tax-free.
>Fact: Under existing law, a remote mail-order or Internet sale between a
>customer and a business located in the same state is subject to sales tax
> a not uncommon occurrence in large states. Furthermore, Internet-based
>businesses pay profit and property taxes the way many other businesses do.
>Because they rely so heavily on telecommunications to stay connected, some
>online sellers may have proportionally heavier burdens of taxes associated
>with these technologies. When customers shop on the Internet, the shippers
>pay fuel and other types of transportation taxes.
>Myth #10: The Internet is destroying Main Street businesses.
>Fact: The Internet has enabled Mom and Pop retailers to advertise their
>products and services to a whole new world of consumers. It has also
>provided practical money-saving technologies that have allowed numerous
>traditional firms to survive and thrive, including online tax preparation
>services, better inventory management, and ease of ordering various inputs
>necessary to producing their finished goods. In 2012, research by The
>Boston Consulting Group found that small and medium-sized companies that
>embrace the Internet in their business operations grew by 10 percent
>annually in the last three years, adding jobs as they did so.
>Online commerce has revolutionized American small business by allowing a
>Main Street store anywhere to become a Main Street store everywhere.
>But Main Street retail businesses will no longer to be able to continue to
>compete online with larger enterprises if the government begins to add new
>tax burdens that increase the advantage of bigger operations.
>These new burdens have absolutely nothing to do with the federal budget
>process and amount to using backdoor politics to increase tax burdens on
>small businesses. These additional tax burdens will only help mega
>retailers get bigger, and curtail growth, stymie competition and cost jobs
>among small businesses, online and offline.
>I need your help! I would like the Maine RLC to take action immediately by
>sponsoring this resolution as well as writing your elected
>representatives, voicing your concern and strongly urging them to withdraw
>any public support and vote NO on this amendment.
>Therefore, I am asking that this be placed for consideration on the next
>Thank you for your vigilance!
>Resolution and Public Petition Opposing the Market Place Fairness Act (S.
>Whereas, in the case of Quill Corporation v. North Dakota 504 U.S. 298
>(1992), the United States Supreme Court rules that businesses that do not
>have a "physical presence" in a state cannot be forced to collect that
>state's sales tax;
>Whereas, the Quill decision protects online businesses from having to
>incur the costs of acting as a tax collector for all 50 states, it
>prevents all companies from having to pay sales taxes to a state
>government where they have no representation, and blocks state government
>tax enforcers from auditing and litigating against out-of-state
>Whereas, the limits on the ability of state governments to enforce sales
>tax burdens on out-of-state retailers promoted retail competition,
>innovation and helped keep prices low to the benefit of all consumers;
>Whereas, burdening the Internet with new taxes and regulations will harm
>the American economy at a time when many Americans are struggling to find
>jobs and provide for themselves and their families;
>Whereas, the Market Place Fairness Act (S. 336/HR 684) would overturn
>Quill and authorize states to "deputize" all US internet merchants to
>collect sales taxes for all states, including all of the states where they
>do not reside or operate;
>Whereas, the National Internet Sales Tax Mandate represents a major tax
>increase on every American who shops online;
>Whereas, the National Internet Sales Tax Mandate forces on-line businesses
>to know the details of each state and locality's sales tax laws, thus
>creating a different pricing structure for each customer depending on
>where they live. These companies would then have to figure out how much
>tax they owe each state and locality, send the corresponding payments, and
>be subject to audits and enforcement action in each state;
>Whereas, these compliance threats and costs will further raise the prices
>of goods purchased over the Internet;
>Whereas, the compliance costs of the National Internet Sales Mandate will
>discourage the growth of Internet-based business, thus hampering the
>development of the most dynamic sector of the American economy;
>Whereas, the Internet Sales tax mandate could encourage states to raise
>their sales taxes instead of addressing their fiscal crisis with serious
>spending cuts and reforms;
>Whereas, governments and tax collectors have always preferred to target
>citizens and businesses who they do not represent and do not have the
>power to democratically remove them from governing positions;
>Whereas, the eternal desire of governments, including the US States, to
>tax those who they do not represent and are beholden to led to the
>American principle of "No Taxation Without Representation";
>Whereas, the original intent of the Commerce Clause was to enable Congress
>to guarantee free trade among the states by ensuring states could not
>impose onerous regulations or taxes on out-of-state businesses;
>Whereas, the National Internet Sales Tax Mandate, by giving states the
>power to level taxes on inter-state transactions flips the Commerce Clause
>on its head and dramatically expands the reach and power of government in
>the Internet Age;
>Therefore, be it resolved that:
>The Republican Liberty Caucus of Maine opposes the National Internet Sales
>We call on Senator Susan Collins to remove their name as a cosponsor of S.
>336, the Senate version of the National Internet Sales Tax Mandate;
>We call on Senator Angus King to remove their name as a cosponsor of S.
>336, the Senate version of the National Internet Sales Tax Mandate;
>We call on Representative Chellie Pingree to remove their name as
>cosponsors of HR 684, the House version of the National Internet Sales Tax
>We call on all members of the Maine congressional Delegation to publicly
>pledge to oppose the National Internet Sales Tax Mandate;
>We call on Governor Paul LePage to withdraw his support and publicly
>request that the National Governors Association officially withdraw its
>support of the National Internet Sales Tax Mandate.
>We call on Governor Paul LePage to publicly oppose the National Internet
>Sales Tax Mandate.
>Chief Sponsor - Bryan Daugherty
>Co-Sponsor - Michelle Anderson