The election is over; the voters have spoken. But that doesn’t mean that Congress is done for the year.
No – they’re headed back to Washington, intent on getting some basic things done that are well beyond the supposed deadline. Little things like legislation funding the government, for example.
But in the Senate, a cabal led by liberal Democrat Dick Durbin and Republican Mike Enzi are intent on jamming through a misnamed bill labeled the Marketplace Fairness Act (MFA) with a timeworn strategy of attaching a bad idea with a good idea.
First, a step back: ever since the late 1990s, Congress has repeatedly reauthorized a bill called the Internet Tax Freedom Act (ITFA). This is the good idea. As the name suggests, this extraordinarily popular bill prohibits taxes on Internet access – a tax that many states are salivating over as a source of revenue. And clearly, if Congress fails to reauthorize the ban, many states would quickly pass it and further burden American taxpayers.
Now, some in the Senate – led by Enzi and Durbin – want to tack the bad idea (the MFA) to the good idea (the ITFA). Worse, they are pressing forward despite the fact that Speaker of the House John Boehner has made it clear that the House will not consider MFA this year.
Why is the MFA a bad idea? To begin, there’s nothing fair about it. All but written by lobbyists for the nation’s biggest retailers (think: WalMart and Amazon), it would unleash tax collectors from almost 10,000 taxing jurisdictions (states, counties, and municipalities) across the country to surf the Internet in a mad quest for revenues.
The bill’s Congressional proponents recite the mega retailer’s talking points when they claim that this would “level the playing field” between brick and mortar stores and e-retailers, and that the compliance cost for e-retailers would be manageable.
On both counts, they are, to be charitable, wrong. MFA proponents claim that compliance costs would be negated by “free” software to calculate the necessary sales taxes for the 9,600 jurisdictions, but even the makers of that software have stated that their product is far from free. Moreover, any error however innocent could put the e-retailer at risk, to quote Senator Durbin, of “some 45 audits.” For a small e-retailer with just a handful of employees, even one audit might be enough to put them out of business; the threat of 45 such audits might cause a small business owner to reconsider whether it’s even worth it to keep their doors open.
As this indicates, the Marketplace Fairness Act is not at all about providing a “level playing field” for all retailers. Rather, it’s about the Amazons of the world using their friends in Congress to crush their smallest online competitors through legislative action.
This would be the wrong course for Congress to take at any time, but it’s particularly inappropriate when at least seven – and perhaps as many as nine – members of the Senate, almost all of whom have voted for the Marketplace Fairness Act, have lost election. Now, in this short window before they leave office, but after the voters have sent them packing, Majority Leader Harry Reid wants these lame duck Senators to join him in jamming through this Frankenstein of a bill combining the Marketplace Fairness Act and Internet Tax Freedom Act, known as the Marketplace and Internet Tax Fairness Act (MITFA) – with the not-so-subtle threat that should the House of Representatives refuse to go ahead with their scheme, ITFA will lapse and millions of American will be forced to pay taxes on Internet access.
But any member of Congress who buys this bill of goods – that by voting for MITFA they are voting to protect the Internet from taxation should heed the words of Democratic Senator Ron Wyden of Oregon, a leading opponent of MFA: “Anyone who votes for passing MFA alongside ITFA is voting to repeal the Internet Tax Freedom Act.”
Voters just fired a pair of Senators who voted for the Marketplace Fairness Act, with one more still potentially facing defeat; their colleagues should take note before rushing to let tax collectors loose on the Internet in the name of “fairness.”
