House Speaker John A. Boehner’s decision to oppose an Internet sales tax measure championed by Senate Democrats and Republicans in the lame duck session is not just good politics, but also good policy in light of the efforts the House Judiciary Committee has already made toward developing an alternative that would treat all kinds of retailers fairly and equally.
At first blush, Boehner’s announcement that he would oppose any effort to jam the ironically named Marketplace Fairness Act through Congress in the lame-duck session may seem like politics as usual, but the sordid history of that legislation paints a different picture.
Senate supporters of the MFA have subverted normal order and the deliberative process at every turn in an attempt to ram their bill through Congress. Since passing the Senate in 2013, the measure has waned in popularity with each passing month, as details of the unfair and unnecessary burdens it places on remote sellers have been exposed.
Realizing the tenuousness of their position, MFA supporters have turned to the cheapest of legislative parlor tricks — attempting to attach MFA to the popular (and necessary) Internet Tax Freedom Act — in a last-ditch effort to haul it over the finish line before the end of 2014.
Meanwhile, in the House, Judiciary Committee Chairman Robert W. Goodlatte, R-Va., has led a thorough and painstaking process to develop real solutions on the complex issue of remote taxation. Last year Goodlatte published guiding principles for remote taxation and his staff has worked diligently on an alternative bill that meets those principles. In stark contrast to the Senate parliamentary games that gave us the MFA, Goodlatte’s approach has been open and collaborative, drawing on input from advocates from all sides of the issue, including the businesses that would bear the burdens of a new sales tax regime.
Contrary to what Senate leaders are trying to do, the resulting House legislation should be reflective of the collaborative process, and yield a result that allows states to collect sales tax on remote sales without unfairly penalizing online and catalog businesses. The Goodlatte principles, which include technology neutrality, tax competition, and respect for states’ rights, go directly to the fundamental flaws in MFA. Proposals based on the Goodlatte principles have eschewed the proprietary software schemes, and multi-state auditing frameworks in favor of simple, easy-to-implement collection methodology.
The benefit of this approach is that, unlike MFA, it wouldn’t pick winning and losing retail business models. The collection burdens on remote sellers would be the same as those borne by brick and mortar retailers, and would be far more scalable to smaller online sellers an outcome that is truly “fair.”
The deep-pocketed interests who’ve been driving MFA include some of the largest “big-box” retailers in the U.S. The Senators they’ve been lobbying have made clear that they intend to mount a full court press in the coming weeks, and the tools they have at their disposal are formidable. They claim to want to create a level playing field for “Main Street retailers” when in fact, few, if any, of their stores occupy any main streets.
If the Senate persists in linking MFA to ITFA, the House will be faced with a serious conundrum. ITFA protects millions of Americans against taxes on their Internet access charges, and has been a key driver of the Internet’s growth since its passage more than 15 years ago.
That threat is why Boehner’s public commitment to oppose MFA is so important, and so timely. It may not be enough to prevent outgoing Senators from attempting a last bit of procedural sleight-of-hand, but it makes it much harder for supporters to move the fatally flawed MFA in a quick and chaotic lame-duck session.
If we make it to the end of this Congress without a regressive and discriminatory tax on Internet and catalog commerce, we will have the Speaker to thank for taking a stand when it mattered most.
Hamilton Davison is the president and executive director of American Catalog Mailers Association (ACMA) and co-founder of the True Simplification of Taxation (TruST) coalition.