A survey conducted by the R-Street Institute and the National Taxpayers Union shows that voters across the ideological spectrum oppose the Marketplace Fairness Act (MFA). If signed into law, the MFA would enable states in which online purchases are made from companies located in other states, to collect a sales tax from the company. Not only do the findings demonstrate Americans don’t want higher taxes and a more expansive government, but the MFA could also have important electoral implications:
- Conservative voters oppose the MFA by a 2:1 margin. The study notes that any Republicans who do support the MFA could be facing very tough primary challenges ahead.
- With 56% of Independents opposing the tax compared to 37% in support of it, the MFA could be a swing issue in favor of Republicans.
- Liberal voter margins were smaller, but 48% still opposed the MFA while 43% supported it. This means that Democratic advocates of the MFA could risk alienating their base come election season.
This is great news for conservatives and libertarians who are concerned the House might pass the MFA.
As with most things the government calls “fair,” the MFA is actually an intrusive extension of government power. If enacted, the tax would greatly increase the breadth of state governments by allowing tax collectors to reach across state lines for revenue. Proponents claim the MFA will level the playing field between brick and mortar stores and online retailers, but opponents see it as just another attempt by states to tax their way out of debt.
The economically beleaguered voter would rather not see consumers and affordable online outlets like Amazon, eBay, and Overstock.com get hit with an estimated tax increase of $23 billion. With over 9,600 taxing governments in the United States, the MFA will force these businesses to become subject to more convoluted tax codes. Worse yet, the MFA’s legal extensions are a recipe for dangerous unintended economic consequences.
The law effectively establishes a tax base outside of an individual state’s voting population. This means states with few online retailers can poach tax revenue from states with a lot of online retailers, like California and Delaware. Without a presence in the electoral population, it will be difficult for businesses to defend themselves from foreign state tax collectors, even while they receive no benefit (state roads, etc.) from said taxes. The result may be protectionist competition between state governments, such as punitive sales taxation, and internal business incentives, both of which will only further distort and harm the market.
The MFA reminds me of Ronald Reagan’s famous quote about the government’s view of the economy: “If it moves, tax it. If it keeps moving, regulate it. If it stops, subsidize it.” Online retailing has been one of the most productive innovations of the information age. It has unleashed a dynamic market place in which businesses from around the world compete to deliver goods to our doorstep at a fraction of the economic and temporal cost of manually shopping at a brick and mortar store. Yet when the government sees this vibrant market place, all it can see is another tax basin to latch on to.
The Internet is a bastion of liberty and innovation, and should be kept separate from government interference like the Marketplace Fairness Act.