'Marketplace Fairness Act' unfair to all
By Mark B. Wieser— In last week’s guest column, Jerry McCall tried to convince readers that buying across state lines to avoid paying local sales taxes is unfair to business. Additionally, he wants you to believe that Congress should step in and level the playing field.
Nothing is that simple. He also complains that he is up against a multi-billion dollar online giant like eBay. EBay might be owned by a multi-billionaire, but those using its service are people like you and me, and who are still free to sell and buy as we please without having to pay or collect another state’s taxes.
The bad news is that people like McCall are gaining an advantage in convincing members of Congress to make every business in every state collect taxes on every resident of every other state who dares to buy something on-line in another state. The really bad news is that he wants our congressman, Lamar Smith, to go along with the insane measure, and I guess his message was to encourage readers to contact Smith with support for the Marketplace Fairness Act.
McCall would have you believe that advancements in software make it easy for your local Dairy Queen clerk to collect the sales taxes from a visiting tourist from Newton County, Ark., at a minimal additional cost. I know that this example is not an on-line transaction, but the requirements are the same. Because I am engaged in selling on-line, I know what I am writing about. Knowing the exact residence of every buyer of our products would be required under the law that McCall wants Congress to pass. We would have to know whether our buyer lived in a city or in the county. We would have to know if they lived in a water district or other district of some sort authorized by a state to collect a sales tax. I am sure that readers know that residents of Gillespie County, for example, do not pay City of Fredericksburg sales taxes if they buy something outside the city limits of the city. Shopping at Dittmar Lumber Company, for example, saves a city resident one-half percent in taxes over buying the same thing at Sutherland’s.
The problem in collecting sales taxes for every taxing authority to which the resident is subject to could be even worse. What if there was a water district or a fire district or some other taxing district in which the on-line buyer lived? A seller under the proposed law might also have to collect those taxes. Just imagine, all businesses would have to know the tax rates in effect of every city, county, state and territory in the United States, including every utility or other service taxes imposed on that buyer. I think at the last count, there were over 6,000 such taxing districts in the United States. McCall would be responsible for mailing all of those taxes in to each and every one of those taxing authorities either every month or at a minimum of once a year. Cities, such as San Antonio, which collect taxes on every visitor to the city for its sports arena would also be included if a buyer lived in such a city in another state doing this same thing. Just imagine the cost of the software that McCall thinks would solve this huge problem at a minimal expense. It would be one that required constant updating each time a city, county, or taxing district changed their tax rates.
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