The US Senate just passed the misnamed Marketplace Fairness Act on a 69-27 vote.
Both of North Dakota’s Senators, John Hoeven and Heidi Heitkamp, voted for the bill which allows states to collect sales taxes from online retailers even if they have no physical presence in the state in question and thus use none of the state government’s services.
Which is why calling this the Marketplace Fairness Act is just wrong. There’s nothing fair about taxing businesses that have no physical presence in a given taxing jurisdiction.
While this law contains exemptions making it light in application for now – it only applies to online retailers doing over $1 million in revenues – those exemptions can and almost certainly will be ended in the future. And on the enforcement end, this opens up whole new worlds for government regulation of the internet.
Just as the governments futile attempts to regulate alcohol sales during prohibition, and drug sales in the current “war on drugs,” resulted in huge expansions of government power so too will the efforts of the state to impose taxes on the wilds of internet commerce.
Thankfully, the House is putting the brakes on the rapid advancement of this idea, but most of the objections there seem to be about form over substance.
There seems to be little in the way of principled objection to allowing states to tax businesses that exist outside of their taxing jurisdictions.
Update: During a recent interview, Senator Hoeven said he’d like to see the exemptions in the bill raised to $5 million. That didn’t happen, but he voted for the bill anyway.