Open Letter – Stop the Internet Sales Tax

Open Letter from Conservative Leaders: Did Republicans Promise Democrats and Big Business an Internet Sales Tax Vote This Year?

September 30, 2016
Washington, D.C.

Insiders on K Street have reported a secret plan that Republican Leadership will soon bring to the floor of either the U.S. House or the U.S. Senate a bill that would increase taxes consumers pay on purchases made over the Internet.  Previous press reports have relayed a promise that Senate Majority Leader Mitch McConnell made to the Senate Minority Whip Dick Durbin back in February—that Leader McConnell would schedule a vote on an Internet-tax-increase bill sometime this year in exchange for Whip Durbin dropping his opposition to the customs conference report. This quid pro quo is bad enough, but what makes it worse is that the Leadership is reportedly planning on bringing up the bill AFTER the November elections, during what is known as a “lame duck” session of Congress (the time between an election and when the new Congress is sworn in).

This plan appears to be a deliberate attempt to hide something from the voters that Leadership knows is unpopular.  But Leadership can’t bring itself to say no to their lobbyist friends on K Street, so they’ve reportedly promised them a vote after the elections, when the voters can no longer show their disapproval at the ballot box for raising their taxes and their costs of purchasing goods online.

This is shameful behavior and must be opposed.

An Internet sales tax-increase bill—be it the Orwellian-named Marketplace Fairness Act, Online Sales Simplification Act, or the Remote Transactions Parity Act —would force online sellers to collect and remit sales taxes on all purchases based on where the purchaser lives, regardless of whether the sellers have a physical presence there.  These taxation schemes would clearly be harmful to consumers and businesses of various sizes.  Different problems emerge depending on the structure of the Internet sales tax legislation.  Such criticisms include:

• It would disadvantage small businesses.  According to the Tax Foundation, there are nearly 10,000 tax jurisdictions in America. Small online retailers and catalog companies will be forced to determine and remit the local and state sales taxes in each of these places—and fear audits and reprisals if they get it wrong (which would be common, since local tax laws and the regulatory definitions within are changing all the time).  Larger businesses may be able to handle these additional burdens, but most small businesses certainly will not be able to.

• It would be a cronyist handout to big business.  Since the schemes would—by design—erect barriers to entry (and to staying afloat) for small businesses, big businesses like Amazon and others have already said they will cash-in by setting up their own tax- collection software platforms.  And of course the “big-box” retailers are chomping at the bit for this legislation, since it directly adds to their competitive advantage over small retailers.
• It would create a massively un-level playing field.  Whereas “brick-and-mortar” businesses are only required to collect and remit taxes in the states in which they are physically located, online businesses would have to collect and remit taxes for every jurisdiction of every purchaser online—which could be thousands depending upon the version!  Think of this another way:  When a “brick and mortar” company makes a sale in a store, it collects and remits taxes for where that store is located.  It does not have to ask the consumer where she lives and where she pays taxes.  But under the Internet sales tax-increase bill, an online company would have to ask each consumer where she lives and where she pays taxes—and then collect and remit accordingly.  This is the exact opposite of a level playing field.
• It would harm the privacy of consumers.  Under this proposed bills, scores of consumer data about purchases and other online behavior would have to be sent to numerous state and local bureaucracies, significantly increasing the very real possibilities for hacking—and increasing the types and amounts of information that Government collects and knows about citizens, including and especially citizens not in their jurisdictions.
• It would be taxation without representation.  Perhaps most harmful to the American way of governance is this bill’s allowing of state and local governments to tax people who do not live—and therefore do not vote—in their jurisdictions. As Senator Ted Cruz (R-TX) said about the Marketplace Fairness Act, “I think it is fundamentally unfair to ask a Texas business to collect taxes for California…or for New York…and a nanny state in particular because they can’t hold those politicians accountable.  They don’t have a presence there, they don’t vote there, they don’t have influence there, yet they are being dragooned into collecting taxes.  I think that’s fundamentally not right.”  This overreach would unquestionably break down the constitutionally-protected federalism that our Founding Fathers designed.
• It would create a sales tax in states without a sales tax.  Online retailers operating in states without state sales taxes would be forced to collect information and/or collect and remit sales tax from out of state buyers.  A federally required obligation of this nature represents a dangerous extension of the reach of state tax collectors into states that chose a different mechanism to fund governmental operations.

The Conservative Movement should not stand with politicians looking for more tax revenue and big businesses looking to make it harder for their competitors to survive.  The Movement should not allow congressional leaders to deliberately hide tax increases from the American people.  If the policies in this bill were as wonderful as the proponents say they are, then why not bring up this bill for a vote before the election?  Congress has been in session almost all of September.  It’s had plenty of time to consider this legislation.  But instead—congressional leaders are reportedly planning to schedule a harmful bill only after the voters can no longer immediately do anything about it.

Let the Conservative Movement stand with the consumer, with the small business, with the American people. No Internet sales tax increase before—or after—the election!

The Honorable Becky Norton Dunlop
Chairman, Conservative Action Project
Former White House Advisor, President Ronald Reagan

The Honorable J. Kenneth Blackwell
Chairman
Constitutional Congress, Inc.

Diana L. Banister
President
Shirley & Banister Public Affairs

Michael A. Needham
Chief Executive Officer
Heritage Action for America

Alfred S. Regnery
Chairman
Law Enforcement Legal Defense Fund

Erick Erickson
Host, WSB Radio
Editor, The Resurgent

Sherri R. Martin
Executive Vice President
The Martin Organization

Nicholas Stehle
Campaign for the American Future

David Bozell
President
ForAmerica

Donna Hearne
CEO
The Constitutional Coalition

Jim Backlin
Christian Coalition of
America

Kathleen Patten
President and CEO
American Target Advertising

C. Preston Noell III
President
Tradition, Family, Property, Inc.

Richard Falknor
Publisher
Blue Ridge Forum

Kenneth F. Boehm
Chairman
National Legal and Policy Center

Elaine Donnelly
Founder and President
Center for Military Readiness

Tricia Erickson
President, Angel Pictures & Publicity, Inc.
Publisher, www.TheConservativePundit.net

William W. Pascoe
Partner
Antietam Communications

Floyd Brown
Chairman
Western Center for Journalism

Gary L. Bauer
President
American Values

Ann L. Drexel
Conservative Activist
Tampa, Florida

Willes K. Lee
President
National Federation of Republican Assemblies

Andresen Blom
Executive Director
Grassroot Hawaii Action, Inc.

Stephani Scruggs
COO
Coalition For a Strong America

Quin Hillyer
Veteran
Conservative Columnist

Tim LeFever
Chairman
Capitol Resource Institute

Monty Warner
Plains States
Legal Foundation

The Honorable Jerry Melvin
Former Dean, Florida House of Representatives
President, Florida Republican Assembly

Larry Cirignano
DC Representative
Children First Foundation

Diana Denman
President
The Reagan Legacy Forum

Dr. James C. Dobson, Ph.D.
Founder and President
Family Talk

(All organizations listed for IDENTIFICATION purposes only)