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Senate Hacks Free Market with Bipartisan Support

Senate Hacks Free Market with Bipartisan Support

As a citizen activist, I remember how thrilled we were with the results of the 2010 election, in which the Republicans made enormous gains that were suppose to protect the free market.

Fast forward to 2013.  The Senate has just approved the “Marketplace Fairness Act“, legislation that will end tax-free online shopping.  The measure now goes to the House of Representatives for a vote, and lobbying both for and against the measure is expected to be intense.

Sadly, it looks like  our congressional representatives will show the usual amount of backbone that we have come to expect:

The bill now heads to the House of Representatives for possible revision. TechCrunch’s sources on Capitol Hill say that broad support in the Senate makes it difficult for House members to oppose the legislation, but it may be modified to increase the threshold for businesses who have to collect online taxes, from $1M in revenue to $10M

One of the senators wanting to impose this fresh, new tax on the American public is Elizabeth Warren.  Warren, who campaigned as being for the “little guy”, has managed to screw over quite a few of them with this bill (which she even co-authored).

But Warren never pretended to be a tax-hating, small government supporter.  Republicans who voted “yes” on the measure once proclaimed themselves to be free market warriors to gain Tea Party support.  Fire Andrea Mitchell names the 22 Republican senators who approved the legislation, and notes:

The list includes your usual gang of RINOS. John McCain, Lindsey Graham, Susan Collins, John Thune, etc. The only surprises to me of the 22 Republicans who voted in favor of the Marketplace Fairness Act aka the Internet Sales tax were Deb Fischer and John Boozman. Rob Portman was also a bit of a surprise. The rest, not so much.

Americans for Tax Reform has a fascinating generational breakdown of the vote: Every Republican (seven in total) aged 50 and under voted against the Marketplace Fairness Act; twelve of thirteen Republicans who are 55 and under voted against the Marketplace Fairness Act.

Why did these Republicans vote to raise taxes? As always, follow the money: Amazon, which once vigorously fought against internet sales tax, recently switched its position.

Now that the retailer has a massive edge in online retail, Amazon is fine with enforcing such a complex and expensive tax scheme. Nothing about the proposal has changed for Amazon specifically-they understand that this will be a very costly and burdensome proposal to obey. The difference now for Amazon is that its executives feel confident they can bear the costs while other smaller competitors cannot.

Part of the reason Amazon will now be able to dominate the internet sales market, and quash small business competitors, may hinge on software the company has now patented that will efficiently deal with the complexities of interstate sales tax record keeping:

Not only does Amazon now have an incentive to grow its business into other states but it has something that every other kid on the block wants: state and local sales tax infrastructure. It’s complicated. And expensive. And who has the money and resources to develop – and potentially market – that kind of technology? Why, Amazon, of course. And chances are, they’ve been counting on this, having already applied to patent technology (Patent 20060036504) to code items for sale for international tax purposes with many predicting a similar patent for state to state taxation waiting in the wings (they have an awfully vague patent application from April of this year allowing for price change based on customer which gives one pause). Wouldn’t it be awfully convenient if – just at the time that retailers needed this kind of technology – it turns out that exactly that was available under a patent from one of the bill’s biggest supporters?

While I will encourage everyone to contact their congressional representative to reject the House version of this measure, I sense that the deals have already been struck. I will just note that, if California’s experiences are any indication, the revenues will be less than expected.

Crony capitalist connections have been promoted, once more, by Washington politicos. I think many of my Republican friends will be looking at the 2014 slate of GOP candidates with this adage in mind: Fool me once, shame on you; fool me twice, shame on me.


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Henry Hawkins | May 9, 2013 at 9:15 pm

for this and other recent transgressions, Senator Burr NC just lost my support.

In a similar situation on a smaller scale, we conservatives in NC were delighted our years of effort finally produced the big three: a GOP governor, state house, and state senate – for the first time in many, many decades. So what do we get? They are pushing a state tax reform bill which lowers individual and corporate state taxes in favor of new taxes on a hundred heretofore untaxed small business services such as tax preparers, masseuses, roofers, etc., calculated by most to be an overall tax increase.

As a small business owner, this means that, against my will, I will be forced into serving as an unpaid tax collector for the state of NC, donating several hours per week of my time doing the accounting for them.


    ZooMaster in reply to Henry Hawkins. | May 9, 2013 at 9:37 pm

    Well, now, isn’t that interesting? Ohio is getting the exact same swill infusion. Lower income tax rates in exchange for a wildly expanded sales tax coverage. Who’s coordinating this outrage?

    You aren’t the only one, Henry. I left the Republican party after 33 years just last week for similar reasons.

    snopercod in reply to Henry Hawkins. | May 10, 2013 at 7:05 am

    “Fool me once, shame on you; fool me twice, shame on me” perfectly describes me relationship with Burr. Four years ago when I was with the Asheville Tea Party, the leaders refused to support him. Mostly they opposed him due to the massive amount of “earmarks” he stuck into various bills. I thought opposing a fairly good conservative because he had a weakness for pork-barrel spending – mostly on defense projects – was crazy and I argued with them.

    Now I feel like such a fool because the Tea Party was right and I was wrong. Not only did Burr vote to tax Internet sales, he was one of only sixteen republicans (lower case intentional) to vote to move the gun control bill forward in congress (ditto). Burr voted with other notable conservatives like Susan Collins, Lindsey Graham, and John McCain.

    He also voted to send twenty F-16s to the Muslim Brotherhood in Egypt, if you can believe that.

    Richard Burr has gone over to the dark side. I’m so done with him.

My representation in the House in Washington is Joe Kennedy III.

So… Not really gonna waste time on a phone call. Going to spend time dismantling the Democrat machine that keeps him in power.

Come see:

Honestly, who comes up with these names? “Marketplace Fairness” – are you kidding me? I shop online because of the convenience. Sure, most purchases are tax-free, but that is usually offset by shipping charges.

Of course, I still have a choice where I shop. I can now drive all over town (in Houston, it takes 45 minutes to drive from one side to the other – on a Sunday morning) wasting my time and gas to find out they don’t have the model I wanted in stock, or the color, or size, etc.

Or I can go online, find exactly what I want, compare prices for the best deal, and have it delivered to my front door.

Gee, I wonder if that extra tax will put me back in the B&M stores…Fairness, shmairness – it’s all about the money, and everyone knows it.

    Paul in reply to IrateNate. | May 10, 2013 at 2:05 am

    Ayn Rand would be proud of the government’s ability to euphemize (euthanize?) their language in bills.

    snopercod in reply to IrateNate. | May 10, 2013 at 7:14 am

    I live out in the sticks and depend upon online shopping because the “stuff” I need isn’t available within an hour’s drive. With gas prices like they are, it literally costs me $20 in gas to drive to the “big city” and back. Just this week, for example, I needed some black electrical receptacles and wallplates for a project I’m working on. The nearest electrical distributor to me is probably 30 miles away and it’s doubtful they even stocked them. I ordered them online and had them on my doorstep in two days.

    The rich city folks in congress just don’t get it.

    Anytime that a piece of legislation has the words “fairness”, “protection”, “affordable”, “safety”, etc., in the title, you can bet the farm that it will have the opposite effect or no effect.

Guv’ment programs for free stuff are the root cause of this evil of uncontrolled tax increases no matter what form they take.

You can count true conservatives on less than three digits that have the public’s interest in mind which is not good. Only by replacing the offenders with true reformers will we see a turn of events.

Could 2014 be a turning point???

One small quibble with Ms. Eastman’s original post, though. Internet shopping has not been free in Ohio. If the retailer does not collect the sales tax on an item, the Ohio buyer is responsible for reporting the transaction and paying the Ohio Use Tax on the transaction. Use tax rate = sales tax rate. Sigh… No freebies here!

    m87 in reply to ZooMaster. | May 10, 2013 at 12:27 am

    This is true in Texas as well. Of course, virtually nobody pays the use tax–probably because virtually no Texan knows there even is such a thing (and because Texas has no personal income tax, and so no annual return that could also ask about products purchased without paying sales tax).

    That said, I don’t see what’s so terrible about this bill. In effect, it’s federal deregulation to permit states to enforce their taxes–which enforcement has to this point been hindered by the so-called dormant commerce clause. If you don’t want internet sales by remote vendors taxed, lobby your state government–don’t rely on federal power to block states’ power in this regard.

      Sanddog in reply to m87. | May 10, 2013 at 12:44 am

      States can already enforce their taxes by going after their residents who shop online. That would be highly unpopular, not to mention costly, so instead, they beg the congress to allow them to force business owners from different states to become their unpaid tax collectors.

      Gee, you’d think the only reason for our existence is to remit taxes to the feds and the states.

        Henry Hawkins in reply to Sanddog. | May 10, 2013 at 4:18 pm

        That’s exactly right. If taxing the people directly is politically risky, you tax insurance companies, power companies, etc., who then have to pass on those costs to the people. The pols get the money, while the companies get the blame. It’s political gold.

So the gist of this story is that Lizzie Warren is a lying hack scumbag socialist. Who knew?

Of course, the Democrats, also known as the protectors of the poor and minorities, also decided to extend what is the most regressive tax, the sales tax, that hurts the poor the most.
This also includes President Affirmative Action, who endorsed this regressive tax.

Remember that government Crony Capitalism is nothing more than PC speak for plain old Fascism. Amazon has a plan to offer same day or next day delivery and this will create a physical presence in many states so they are now in favor of killing off the competition by regulation and paperwork. They will also provide a tax accounting service, for a small fee of course. If it were not for the government rushing in to fix something for a large company this would just up and die.

A little insight into the ‘interstate tax:’

Do you know that Amazon charges vendors a 3% (!) surcharge on the gross amount of sales tax Amazon collects for them in their shopping carts? Not only does that makes a 7% tax 10%; a 9% tax 12%, but guess who gets richer: Amazon!

Can you guess what political party Amazon’s leadership is in bed with — and is the beneficiary of any Amazon political largesse?

Well, that is it for me for Amazon. Sorry, Professor, no more purchases going into the LI kitty. I’ll hit the tip jar from other sources.

A citation to the Amazon tax collection surcharge (2.9%) policy is in order:

So not only do they make a 3% gross profit on the taxes they collect, they ALSO get INTEREST income from the tax dollars they hold before they disperse them to vendors.

The government’s appetite for other people’s money, knows no bounds.

We need a dragon slayer, such as Ronald Reagan or Margaret Thatcher to rise to a position where they can bring down the beast to a manageable level again.

wakelaw1988 | May 10, 2013 at 8:13 am

I have read it here before – Why do we tolerate this tax system and the out of touch people on the Hill who perpetuate these indignities upon us daily? It is because we are too distracted raising our families, making sure they have a warm place to sleep, food on the table and appropriate medical care. We build that every day – to paraphase a current saying – we are so busy taking care of business that we can’t take care of business. We need to start taking care of the real business.

Midwest Rhino | May 10, 2013 at 8:56 am

So the lobbyists maintain the special interest carve outs as they troll in Gucci Gulch. But the little guy gets the tax increase as Boehner fights for the lobbyists?

I’ve bought a lot through Amazon Prime, though try to find a route directly to other vendors, often finding a better deal. Ebay also has a better deal quite frequently. Ebay is against this new tax, I think.

So far, I have not seen anyone talk about the unintended consequence of this bill. We will be setting up the precedent that could be applied to brick and mortar stores. For example, say a Maryland resident went to a Home Depot in Delaware to buy a lawn mower. Right now, the Delaware merchant does not collect MD sale tax (nor a DE tax for that matter). However, if we require Internet merchants to collect out of state sale taxes, why shouldn’t brick and mortar merchants be required to do the same? Back in the 1970s, Pennsylvania tried to get Delaware merchants to collect PA sale taxes on PA residents for the PA state govt. The DE merchants told them to pound sand. Now, should the Internet Sales Tax bill be made into law, PA may have a better chance with DE brick and mortar stores, for the precedent would have been set.

What this would mean is that as a MD resident, no matter who I buy from (Internet or brick and mortar merchant, in state or out of state), the merchant would have to collect MD sales tax and send it on in to MD. How many brick and mortar merchants are prepared to do that kind of paperwork–particularly those who are associated with vacation/travel destinations? Gas stations could be badly affected.

1. One of your bestest posts evah, Leslie.

2. Note that Amazon is trying to use the government to close the growth path that Amazon itself took.

3. Anybody for a consumer boycott or moratorium on purchases from Amazon?

4. Especially if the tax passes in its current form, I would take favorable notice of a politician who calls for antitrust investigation of Amazon. Maybe that’s worth petitioning.

In fact, antitrust should be an explicit topic in deliberations on the bill.

5. In principle I do not object to paying sales tax on online purchases (perhaps with entrepreneurial exemptions to start-up vendors), but this stinks.

SmokeVanThorn | May 10, 2013 at 2:44 pm

Of course this page includes a link to Amazon to raise revenues for the blog.

    1. But Leslie’s blog does not.

    2. Give the devil his due. Amazon has done an effective job of disincentivizing potential critics in the blogosphere.

    3. If you want to criticize a blogger for Amazon links, look no farther than Instapundit. Afaic not a few of his posts seem like de facto Amazon infomercials.

    (My opinion of Instapundit remains positive on balance, but not as positive as it once was.)

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