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Ted Cruz: ‘Why I Oppose The Internet Tax Bill’

From Real Clear Politics:

Why I Oppose the Internet Tax Bill

By Sen. Ted Cruz

May 5, 2013

The misleadingly titled Marketplace Fairness Act is a job-killing tax hike, plain and simple. It is, in effect, a national Internet sales tax, which would hammer the little guy and benefit giant corporations.

Democrat laws are always laughably titled. Look at the Affordable Care Act (aka Obama-Care).

Senators who vote for it are voting to impose audits, compliance costs, lost wages, and inefficiency on small businesses in every state…

Currently, online sellers collect sales taxes based on their physical location. The MFA, however, would fundamentally change how businesses collect those taxes. Instead, it would require online retailers to charge taxes based on the consumer’s location or where the product is ultimately consumed. That’s like your grocery store quizzing you on where you’re going to eat those apples or Hallmark asking where you’re going to send that Christmas card. The compliance burdens associated with charging taxes based on the consumer’s location are mind-numbingly complicated.

This is the real problems. It’s not just a matter of the higher price of goods. The real problem is that there are over 10,000 tax jurisdictions across the country.

And any business that makes more than $1 million dollars a year, which is any serious small business, is now going to have to collect the taxes from those 10,000 regions. Which will require an army of bookkeepers.

Consider this: Online and catalogue retailers with gross sales of $1 million — a level that is mom & pop size in many places — will be forced to collect sales taxes for the country’s 9,600 state and local tax jurisdictions.

And each of those jurisdictions has their own rules.

Just as Obamacare punishes small business with taxes and regulations for employing more than 50 people, this legislation would punish small businesses for making more than $1 million in sales. For many businesses it may be more beneficial to make less money than to keep track of all the different taxes.

Small and medium-size businesses would be subjected to monthly or quarterly tax returns to all 46 states who collect sales tax; in addition, one amendment likely to be added to the bill would also include all 565 federally recognized Indian tribes in the definition of “state,” so businesses would need to collect applicable taxes for them, too.

As if that wasn’t enough, each of the nearly 10,000 jurisdictions gets to have its own tax rates and sales tax holidays with thresholds and caps. Each state can give sellers their own “tax app” and it’s up to the seller to pay for integration into their in-house systems for ordering, fulfillment, and accounting.

Keep in mind, each state still gets to have its own audit, forms, tax base, and definitions. That means every online seller could be subject to dozens — or eventually hundreds — of audits each year.

Which is probably the idea. They want to put online retailers completely under the thumb of the government, via the IRS.

So, how is this fair? After all, brick and mortar stores aren’t subjected to all these rules.

And, how is it fair for a Texas business to collect taxes to support California Gov. Jerry Brown’s big spending? Or to underwrite New York City Mayor Michael Bloomberg’s nanny statism or Chicago Mayor Rahm Emanuel’s anti-Second Amendment agenda?

Make no mistake: Big business supports this bill because it will drive smaller competitors off the Internet and out of business.

And it wouldn’t help small brick-and-mortar retailers, as its proponents claim, because the sales they are losing today are mostly going to big-box stores and giant online retailers — both of whom are already paying sales taxes.

The largest online retailers already have physical business presences in most states. Meaning, they are already collecting and paying the state taxes. Right now, nine of the top 10 Internet retailers collect taxes in every state. Big businesses can afford to hire accountants and attorneys to pay the taxes properly and navigate audits.

Instead, this bill would just impose crushing new costs on small and mid-size Internet retailers.

So only the Amazons and Walmarts of the world will survive.

Enjoy Web-based entertainment such as Netflix and iTunes? Or how about the projected 56 billion apps downloaded in 2013? Well, this bill will open the door to new taxes on every TV show, movie, game, song, or app you download.

Which might even wake up some low information voters.

Naturally, state and local governments are salivating at the prospect of getting a purported $23 billion in new revenue from the private economy. Especially when the out-of-state consumers paying those taxes and the out-of-state businesses owners who collect them can’t vote them out of office.

Last but not least, this bill doesn’t pass constitutional muster. The MFA overturns the fundamental idea that states’ taxing authority ends at their borders. The Supreme Court has said that an out-of-state business could subject itself to a state’s taxing power if due-process concerns are satisfied, namely that the business purposefully targets its activities in that state. But because pure Internet sales by their nature don’t target any one state, this legislation presents a serious constitutional problem.

Which just goes to show what a backward rube Rube is. If he thinks Constitutionality matters.

Raising the tax burden on small businesses in one of the still-thriving sectors of our economy doesn’t make sense. And, imposing a national Internet sales tax while the nation is still trying to desperately to create jobs and provide new opportunities for millions of Americans still struggling to find work is economic foolishness.

But it will give the federal government more money. So it will happen.

This article was posted by Steve Gilbert on Monday, May 6th, 2013. Comments are currently closed.

6 Responses to “Ted Cruz: ‘Why I Oppose The Internet Tax Bill’”

  1. Cruz is to me, the only and last real Conservative in Congress

  2. DON’T FORGET A.P.O.s! Our soldiers fighting or not fighting overseas are STATELESS. So, how to you tax them?

    How about the people living and working overseas? Do retailers have to assess a tax on Americans living in China? How do you do that?

    How about lowering the taxes for brick and mortar buildings? GASP! The crack addict must lower their daily intake? -perish the thought!

    GOVERNMENT GREED. While democrats bemoan the deadly sin of GREED, for everyone else of course, they gobble up every penny they can justify getting their hands on. And if we shave a few pennies via a sequester, they go into withdrawal convulsions.

    Reid is right, Cruz doesn’t want to “play the game” correctly, which means, he doesn’t want to go along to get along with the corruption even though he stands to benefit from it like the rest of them do. The democrats must throw up their hands and think, “Shut up dummy! You want to have an easy life, get rich, and get re-elected for ever in this cushy job, you need to shut up and stop ruining it for the rest of us!”

  3. John Carter

    Luke 11:46 And he said (Jesus Christ), Woe unto you also, ye lawyers! for ye lade men with burdens grievous to be borne, and ye yourselves touch not the burdens with one of your fingers.

    • Scribes in the days of the Sanhedrin were the lawyers of that day. A Pharisee was a member of the strictest religious interpretation of scriptures, so strict … in their interpretation … that they were the joyless nannys of all time, such that political correctness is a pale shade of their beetle brows.

      It was the scribes and Pharisees Jesus came down on, to such an extent that Pharisee is now define as someone who is so hypocritical as to be recognized as a shibboleth of hypocrisy.

      Behold, the modern scribe and Pharisee.

      Congress.

  4. xdannyh

    Not to mention the Tax holidays implemented in some states like here in AZ to avoid sales tax on school clothing, you know for “THE CHILDREN” sorry about that it just slipped out. The Orwellian double speak about market place fairness aside, it just another tax brought to you buy the Dems and Rinos in the Senate. Sen 743 will be impossible to implement and Uncle sugar will have to step in and implement a national sales tax starting a new bureacracy (sp) which will collect the tax for the benefit of, dare I say: “the children” and after siphoning off a good percentage will return the $ to the individual states, allocation to be determined by political propensities. Which of course is the plan all along. Welcome to the new Amerika, where there are no citizens just cogs in the tax machine. And who said slavery was abolished.

  5. SinCity

    “Which might even wake up some low information voters.”, I’m wondering at what point does that threshold is crossed. I read article after article, where I think the same thing. The overreach by the multitudes of taxing authorities has to reach a critical mass at some point. But, alas, I just don’t see it happening any time soon.


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