Marketplace Fairness Tax on Internet: Not fairness, just more tax

S.336, the Marketplace Fairness Act, will tax Internet sales nationwide. It isn't about Photo: Donnelly Homepage / Tim Kern satire

ANDERSON, Ind, April 28, 2013 ― Senator Joe Donnelly, Indiana’s new Democrat in the Senate, asked for constituents’ feedback on upcoming legislation. As a Hoosier and registered Democrat, I offered my thoughts about the upcoming Internet Sales Tax (S.336, billed as the “Marketplace Fairness Act”).

Over a year ago I pointed out that the Internet Sales Tax is just another way for the feds to control more things, and will cost us plenty ― not “save” anything for anyone.


SEE RELATED: “Internet Sales Tax” is Bad Economics, Likely Illegal


Well, the obtuse senator wrote me back (full letter at the bottom of this column), thanking me for my support of this ridiculous, hideous bill. Here is my reply:

Dear Senator Donnelly,

Thank you for your reply to my comment on S.336. However, I wrote you not in support of it (as your reply suggests) but in opposition.

The destructive folly of the statement in your letter, “In Indiana, that translates into $114 million uncollected sales taxes per year,” is horrifying in its naïveté: These taxes are not going to be collected if S.336 is fully enforced; these taxes will simply reduce commerce and lower our ability to buy goods and services.


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First, you seem to assume that adding $114 million in taxes will not alter peoples’ buying habits.

Second, you think that people somehow will cough up $114 million in taxes, and still spend that money on things. They won’t; they won’t have the money!

Third, you think that the commerce will not move offshore, where collection of the taxes is outside your control; it will.

So, your bill, sold to us as a way to help Mom and Pop store owners in Indiana, will really only cost Mom and Pop and all the rest of us Hoosiers, reduce commerce by $114 million (your figure), and force more jobs offshore.


SEE RELATED: Don’t raise taxes on fliers, airline group says


Please note: I AM NOT IN FAVOR OF MORE TAXES, in this form or any other. I, and my fellow Hoosiers, pay plenty in tax already.

Cut spending; balance the budget; stay within the Constitution. If that doesn’t work, get back to me.

Thank you.

*****

Here is the Senator’s canned response to my original correspondence to him:

April 28, 2013

Dear Mr. Kern,

Thank you for taking the time to contact my office about the Marketplace Fairness Act and taxes on Internet sales. Like you, I believe American businesses should compete on a level playing field. With that in mind, I support efforts to ensure traditional brick-and-mortar businesses and online retailers are held to the same tax standards.

As you may know, online retailers, although required to collect sales taxes from customers in their homes states, are not required to collect sales taxes on out of home state sales unless they have a physical presence in the state. As a result, the current tax structure provides a competitive advantage to online retailers, who are not always required to collect sales taxes. In Indiana, that translates into $114 million uncollected sales taxes per year.

As you may know, S. 336, the Marketplace Fairness Act, was introduced on February 14, 2013. If enacted into law, this bill would establish the framework for states and localities to enforce sales taxes on Internet sales to level the playing field between local small businesses and retail stores and the online market. During the Senate budget process, amendments to implement the Marketplace Fairness Act were introduced. I joined with a bipartisan group of 75 Senators to support amendments that would level the playing the field for businesses and ensure that states and localities are able to enforce local sales taxes on remote Internet sellers.

It is a privilege to represent you and all Hoosiers in the U.S. Senate. Your continued correspondence is welcome and helps me to better represent our state. I encourage you to write, call, or email if my office can ever be of assistance. You can also check out my Facebook page and follow me on Twitter by visiting my website


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Tim Kern

Tim Kern taught economics for fifteen years, and discovered that understanding life is easy; it’s recognizing reality that takes practice. He holds a music degree, and later earned an MBA in finance from Northwestern University. He has lived across the US, and now makes his home in Anderson, Indiana.

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