On the heels of tax day, the next piece of legislation on the Senate floor will be one that allows states to tax businesses that aren’t even within their borders. This bill would allow states to tax online sales from companies in other states, shifting the tax collection burden onto out-of-state businesses. It’s a bad, convoluted policy and one free market advocates should oppose.
The so-called Marketplace Fairness Act has serious logistical, economic and constitutional flaws. Even the Supreme Court has ruled that states can’t tax companies that aren’t located in their borders and don’t have a sufficient nexus (such as a distribution center). The cost of complying with the Internet sales tax would be an enormous burden on businesses, especially small businesses.
To make matters worse, Senate Majority Leader Harry Reid is fast-tracking the bill to the Senate floor in order to limit debate. Senators haven’t even held a committee hearing yet. Bills of this magnitude should go through to the normal committee process—not rushed to the Senate floor.
State Policy Manager
Americans for Prosperity