Tech at Night: Harry Reid to push the Sales Tax bait and switch

Tech at Night

Harry Reid is going to put a bait and switch on the agenda in the lame duck session. This is important to watch, because it’s a substantial power grab that appeals big government, tax-and-spend Democrats, as well as squishy, cronyist Republicans. That’s exactly the kind of sour grapes coalition that could pass a bad sales tax bill after the November elections.

Watch your wallet.

Why do I call it a bait and switch? It’s because the so-called Marketplace Fairness Act purports to be one thing, but in fact is actually something else. You see, for the last 14 years, the states have been coming together to form an interstate compact, called the Streamlined Sales Tax. The idea was to create a way for the states to come together, simplify sales taxes, and make them manageable to be charged across state lines.

The SST is a voluntary effort that sales tax states can choose to join, submitting their tax codes to standardized rules. If the US Congress chose to work with that effort, and allowed states in the compact to reach into each other’s states to collect sales taxes, that would be a reasonable, relatively non-controversial endeavor. States could join or not join the compact, and everybody gets what they want. Federalism and Constitutionality prevail. 23 states are full, compliant members of the project.

MFA supporters want you to imagine that this is all it’s about: creating a level playing field where states can merely collect what’s coming to them, without letting anyone get an unfair advantage.

However the bill actually does much more than that. The MFA would allow sales tax states to reach into states that are not choosing to participate, as well as letting states with their own, incompatible rules to do the same. In fact, sellers in states without a sales tax would also be required to participate!

This is not about fairness. This is about expanding government, and punishing online sales, and particularly online sales in states that aren’t interested in joining any multi-state project. This is just more cronyist winners and losers picking.

Because ultimately, the MFA backers will tell you this is about closing a loophole to prevent unfair dodging of taxes. However the Constitution is not a loophole, and federalism is not a cheat.

Besides, the reasons big boxes are failing are higher pre-tax prices, poor service, limited selection, inconvenient …read more    

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