Heartland Institute Experts Comment on Cloture Vote of Marketplace Fairness Act

April 22, 2013

The United States Senate today voted for cloture on the Marketplace Fairness Act (MFA), ending debate and leading to its likely passage soon in an up-or-down vote. President Barack Obama’s signature on the MFA would allow states to start charging sales tax on all online purchases, putting the burden of collection on retailers.

The following statements from tax and technology experts at The Heartland Institute – a free-market think tank – may be used for attribution. For more comments, refer to the contact information below. To book a Heartland guest on your program, please contact Director of Communications Jim Lakely at jlakely@heartland.org and 312/377-4000 or (cell) 312/731-9364.

“Today, the Senate voted to avoid a proper vetting of the Marketplace Fairness Act through the committee process. Supporters claiming this proposal is about states’ rights are incorrect. Requiring businesses, regardless of their physical location, to collect sales tax for more than 9,600 different taxing districts is an affront to states’ rights. The bottom line is that the MFA will have a detrimental impact on consumers, small businesses, and Internet commerce as a whole.”

John Nothdurft
Director of Government Relations
The Heartland Institute

“It is unfortunate that so many senators on both sides of the aisle voted for this bill with so little debate. In previous Congresses, every other bill seeking changes similar to the Marketplace Fairness Act failed when placed under greater scrutiny; today’s tactic should come as no surprise.

“The MFA represents a vast expansion of state taxing powers. The supporters of this bill, hiding behind a ‘states’ rights’ argument, never fully justified how one state can charge sales taxes to a resident of another state, when those residents have no political voice in the taxing state and receive from it no government benefits or services.

“The nexus standard that disallows state governments from forcing a tax on a company without the company having a physical presence in the state is an important taxpayer protection that has been repeatedly upheld in the U.S. Supreme Court. This standard protects us from an abuse that Americans have fought against since our nation’s inception: taxation without representation.”

Matthew Glans
Senior Policy Analyst
The Heartland Institute

“If we assume supporters are correct when they say governments will collect another $23 billion annually, that means there will be $23 billion less for shoppers to use at online as well as brick-and-mortar stores. So we can expect fewer sales as a result of this.

“Supporters keep saying this bill merely ensures shoppers who are supposed to pay taxes on items they buy outside where they live actually pay them, and technology to compute these taxes is available and affordable. If computing and collecting taxes for jurisdictions around the country is so easy, then every retailer should have to do it, not just online and catalog retailers.”

Steve Stanek
Research Fellow, Budget and Tax Policy
The Heartland Institute
Managing Editor
Budget & Tax News

The Heartland Institute is a 29-year-old national nonprofit organization headquartered in Chicago, Illinois. Its mission is to discover, develop, and promote free-market solutions to social and economic problems. For more information, visit our Web site or call 312/377-4000.