With talk heating up for Congress to create an Internet sales tax, Heritage pulled in leading telecommunication and tax experts yesterday for a Capitol Hill briefing on the potential fallout that the misnamed Marketplace Fairness Act (MFA) could have on e-commerce.
Katie McAuliffe, federal affairs manager for Americans for Tax Reform, and Carl Szabo, policy counsel for NetChoice, were quick to run through the litany of hurtful impacts the bill, currently with the House, could have on online businesses.
These effects include requiring online retailers to become tax collectors for 46 states, the District of Columbia, and all U.S. territories and possessions; facing multiple out-of-state audits if online businesses fail to collect the right amount of taxes from out-of-state customers; unforeseen compliance costs; and a larger barrier for expanding or creating new business on the Internet.
The MFA “is not going to be much of a revenue source for states. It’s not federalism. And it’s not sustainable,” said McAuliffe.
Plus, catalog and mail-order sales—which are especially popular for Americans older than 50—have been largely forgotten in the debate, Szabo noted. “Catalog sellers will have to custom print their catalogs by locality to comply with the new tax law, and how will they make up that cost? By passing it down to consumers through higher prices,” he told the crowded room in the Rayburn House office building.
Check out McAuliffe and Szabo’s full remarks in the video above and get more details about the MFA through Heritage’s new fact sheet.
