33% – Myth of a Level Playing Field Part 2

I’ve covered the myth of a level playing field pretty extensively already in a detailed post.  In short, the Marketplace Fairness Act won’t create the mythical “level playing field” for the perhaps even more mythical “Main Street small businesses”.  Have you looked at Main Street lately?  More large chains than anything these days.  They already collect tax in almost all states.

From that post:

Why Efairness/MFA undeniably won’t create a level playing field:

  •  $1 Million Small Business Exemption – there will always be a steady stream of smaller retailers with products for sale without tax.
  • Cheaters – Many people selling through Amazon or Ebay that should collect sales tax don’t.  This won’t change.
  • Foreign Sellers – Will not be bound by the MFA.  I’m seeing more foreign sellers through Amazon than ever, especially from Japan & China.
  •  “99% of businesses won’t be affected by MFA”   What’s so funny is the cognitive dissonance of proponents who try and minimize the impact of the MFA on businesses.    If actually true, it means only 1% of the stores would start collecting sales tax, so that won’t help “Main Street” businesses at all.

Here’s the other key reason that dawned on me more recently when replying to Taxcloud’s ridiculous “Position Pivot” letter to Speaker Boehner.

  • The only states that will be able to collect sales tax are the streamlined member states.
  • Most big states are NOT part of the streamlined group and haven’t been lining up to join
  • Streamlined states only hold 33% of the US population.  2/3 of the population live in non-streamlined states & will be unaffected by MFA.  1/3 of the population would drive this terrible legislation upon all states

To change state laws to join the Streamlined States group is a BIG deal.  This isn’t checking a box, it’s the state’s legislators agreeing to significantly change their laws and perhaps their state constitution to join.  Even if states wish to go this route, it’s going to take a very long time.

The other route for states to exert taxing authority on remote sellers through the MFA is by achieving certain simplification standards which also would require state legislation, new laws, perhaps a state constitution amendment and would also take a long time.

And some states would not be able or interested to significantly change their laws to accommodate the MFA and wouldn’t be able to collect from remote sellers.

So on top of ALL the other reasons why the MFA AKA Efairness won’t actually provide fairness anyway, this now shows that the law will only apply to 1/3 of our US population anyway.

One more reason why the so-called Efairness is just a big-box retail pushed bill won’t achieve it’s goals anyway.  MFA is Terrible legislation that should die.

FYI, Craig Johnson in a streamlined states interview does confirm this 33% figure himself.

Comments

  1. Great point.
    No answer for catalogs + no answer for any online business for 2/3s of us.

    Also, Why do proponents pretend that this will “level the playing field” when it will only affect .04% of online retailers. (Mike Enzi’s words on the floor of Congress, not mine. And he’s a sponsor of the bill!) http://www.c-span.org/video/?c4515770/004-remote-sellers-affected-marketplace-fairness-act

    MFA hurts small businesses both online and remote.

    • Proponents throw out a variety of low numbers here and there with no basis in reality or backing. I’ve never heard of such a low number before. I know he’s mentioning the incredibly flawed SBA report that cost $80,000 and had a laughable methodology (I wrote about it too).

      Obviously, if .04% of online retailers were affected it would not help “level the playing field” in any what whatsoever.

      The reality is somewhere between .04% and Taxcloud’s estimate of 350,000 to 3.5 million retailers will be affected.

Trackbacks

  1. […] Part 2 covers why the MFA is even LESS able to creae a level playing field.  Only 33% of the population […]

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