Fact Check: Marketplace Fairness Coalition’s Grover Norquist Letter 5-13-13

A letter addressed to Grover Norquist.

“As a coalition representing thousands of American businesses – large and small, as well
as both brick-and-mortar and online – we’ve observed with interest your repeated
misrepresentations regarding S.743, the Marketplace Fairness Act.”

“Nonetheless, you have continued to disseminate hyperbolic and misleading statements –
which are inevitably accompanied by fundraising requests for ATR — including a May 6th
email in which you compared the complexity of this legislation to ObamaCare.  While we
suspect many of the Republicans supporting this legislation would take issue with your
comparison, it’s worth noting that the Democrats’ health care bill is roughly 1,000 pages
long, while Marketplace Fairness Act is just 11 pages.  We will leave it to others to judge
the seriousness of your argument.”

There actually are some similarities.   Regardless of your position on ObamaCare, there have been clear examples of unintended consequences.  Numerous news stories refer to employers hiring more part time workers and resisting adding full time workers (especially in food service).  I know multiple business owners who have expressed concern about hitting 50 employees where certain provisions kick in.    Numerous similar news stories have covered this aspect as well.   Several Emainstreet.org retail members I spoke with were on the cusp of the limit and mentioned they would downside to avoid the MFA completely.  Clearly there are negative incentives.

Yes, the Marketplace Fairness Act is 11 pages.  But it leaves many of its actual implementation details to the Streamlined Sales and Use Tax Agreement and other related documents.  The most recent version of the SSUTA is 204 pages.  There are also many collateral documents and forms.  There’s plenty of paperwork to read.

 

 “In this same email you also claimed that this legislation “could put a halt to business
development, increases taxes, and further regulates our last free market.”
To your last point, if you’re against government regulation and interference in the free
marketplace than you should be supporting, and not opposing, the Marketplace Fairness
Act.  Under our current tax system, the federal government is unfairly picking winners
and losers by extending tax benefits to one sector of the retail market, and not the
other.  Leveling the playing field so that all retailers play by the same rules is the very definition of a free marketplace, so your position is confusing to say the least.
It’s also worth noting that a number of conservative leaders and economists similarly do
not agree with your view that this legislation would harm business development.  To the
contrary, no less an economic authority than Arthur Laffer, the father of supply-side
economics, penned an op-ed in the Wall Street Journal”

The federal government is not picking winners.   It’s a state’s use tax, their laws and their obligation to enforce.  This is not in dispute.  They states are choosing not to enforce their existing use tax laws.  And in this free market, there is certainly nothing stopping brick and mortar stores from selling online as well.  Many do, and many more continue to add an online presence.

Regarding the Laffer endorsement, it was a paid study and all of the economic and job benefits were contingent on states actually reducing state personal income taxes by an equal amount.  Whether you believe Laffer’s theories or numbers is irrelevant since this reduction is not part of the Marketplace Fairness Act and only a couple states have expressed any willingness to follow his recommendation.

“Perhaps because the reality – as you surely know – is that nothing in this legislation constitutes a tax increase.  Existing tax rates remain completely untouched by the Marketplace Fairness Act.”

So is it a new tax or not?  If it’s not, and merely enforcing existing laws, why don’t the states enforce the law?  This would have the effect of “leveling the playing field” if consumers knew they would be required to pay the use tax.

Real-world, if it’s an unenforced tax that is suddenly enforced, it will certainly feel like a new tax.  It removes money from consumer’s checking accounts, with all of the economic effects that may entail.  If it walks like a duck, squawks like a duck.. it’s a duck.  If states don’t want MFA to “feel” like a new tax, they of course can reduce their own income or sales tax rates to offset the expense.

“Finally, in your many misleading statements on this issue, you have notably failed to
acknowledge the critical small seller exemption of $1 million in remote sales that is
included in the bill.  To put this figure into perspective, it would mean that over 99
percent of all online sellers are exempt from this legislation.  We can only assume that
you do not address this fact because it directly undercuts your claims of economic and
regulatory hardship for America’s small online businesses.”

Again, not sure where you get this 99% statistic.  We can only assume it comes from thin air.  We can also only assume that you do not address the fact that if 99% of online sellers aren’t collecting sales tax, there is no “leveling of the playing field” for local retailers because it directly undercuts your claims.

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