Close the Loophole, Level the Playing Field

While a growing number of respected and principled leaders within the conservative movement have come out in support of sales tax fairness amongst brick-and-mortar and online-only retailers, some appear to misunderstand the fundamental importance of the Marketplace Fairness Act.

Case in point is a recent piece in the Daily Caller by Neil Stevens.  His piece correctly asserts that closure of the online sales tax loophole now enjoys bipartisan support from progressives and conservatives, Democrats and Republicans alike.  But the “risks” that Stevens points out are based upon unwarranted concerns, and his remedies would, in many cases, actually increase federal powers and burdens upon state and local governments.

The Marketplace Fairness Act’s purpose is straightforward: create a simple framework for states to work out their own issues with collection of the sales tax for online purchases, and thereby leveling the playing field between Internet and over-the-counter retailers.

Both small brick-and-mortar retailers and larger retail stores argue that closing the sales tax loophole will be good for business.  Even online retailers have stated leveling the playing field will not noticeably impact them in a negative way.  Most notably Amazon.com has come around to agree that closing the sales tax loophole must be a high priority for the American economy to continue to grow.

The reasoning is simple: government shouldn’t extend its heavy hand into the market place, disrupt free market competition, and artificially pick winners and losers.

If this were simply an issue of allowing cash-strapped states to haul in more revenue, it would not have the support of conservative, limited-government leaders like South Carolina Governor Nikki Haley, former Mississippi Governor Haley Barbour, Indiana Governor Mitch Daniels and former Florida Governor Jeb Bush, to name just a few.

Nor would these conservative leaders support the principle of sales tax equity if it were an infringement on states rights, as Stevens seems to imply.  The exact opposite is true – the Main Street Fairness Act gives states the right to manage their tax collection issues as they deem fit.  The Marketplace Fairness Act is fair because it eliminates the default preferential tax treatment of one segment of an industry over another.  This allows the free market to operate without the government picking winners and losers, something conservatives tend to support when the subject is raised in virtually any other industry.

The Marketplace Fairness Act is not an attack on online retailers.  It is not about revenue enhancement.  Nor is it a gift to brick-and-mortar retailers.  It is about getting rid of a glaring loophole in the tax code.  It stops government from interfering with free market competition.  Internet and over-the-counter retailers each have their own advantages and disadvantages, but ultimately it should be up to the consumer to choose which suits their needs.

Conservatives agree that an antiquated federal tax policy that gives preferential treatment to one industry over another is wrong. Conservatives also agree that a federal tax policy that prohibits states from addressing these issues on their own is not something most free market and limited government individuals will support.