Action Alert: Internet Sales Tax Looms

The United States Senate just voted to move forward with the "Marketplace Fairness Act". The bill would allow states and municipalities to collect sales taxes based on where the purchaser lives, in contrast with the current system which only allows taxes to be collected where online distributors have a physical presence.

The main argument for the bill is that online distributors have an unfair advantage over traditional grounded businesses by being able to offer products tax free in many locations, and that is a fair point. But in this feeble economy, and with no proposals for reductions or elimination of taxes in other areas, the real goal is to raise more money irresponsible, bankrupt local governments and increase Washington's control over cyberspace. As Grover Norquist points out, this will create competition between states for higher taxes, not lower taxes.

As Grover says:

"Of even greater concern is that a remote sales tax will create competition among states for higher taxes, rather than lower taxes. Currently, states can only tax those consumers who reside within their borders. This “physical presence standard” ensures that the businesses taxed by states have the ability to express
their approval or displeasure with state tax code through elections, referendums, etc. This legislation encourages states to collect taxes across their borders from businesses with no recourse. Thus states will compete for revenue by increasing cross-border taxes, rather than lowering taxes. An incentive to raise taxes can never prove beneficial."

He also points out privacy concerns, all too well known to those familiar with the recent CISPA renewal:

  "In order to collect the proposed remote sales tax, businesses would be forced to send personal information about their customers to a host of state revenue departments. This opens consumers up to the very real potential of losing personal information. In South Carolina, for example, hackers gained access to tax return data, including social security numbers, of 5.7 million people and 700,000 businesses. Hackers have consistently proven they possess the capabilities to overcome many security measures. Government agencies lack the expertise and resources to properly protect the personal information they already gather. A law that mandates they collect more information only makes more individuals and businesses vulnerable to the dangers associated with the loss of personal data."

Thanks to Freedom Works, you can send a message to your Senators now urging them to vote against the Marketplace Fairness Act.

Click HERE to do so.

Or better yet, you can call your Senators at this number: