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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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    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.

    UDBlueHen | May 10, 2013 at 11:34 am

    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.

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