For Release: 10:30 AM, November 9, 2011
Contact: Bruce Hahn: 571-214-1013

Legislation introduced today by Senators Dick Durbin, Mike Enzi and Lamar Alexander would increase the sales taxes paid by American homeowners and other consumers. It would expand the collection of one of the nation’s most unpopular taxes. The “Marketplace Fairness Act” would also slow economic recovery and hurt financially stressed consumers and the environment.

A 2008 survey by Parade Magazine, asked readers: “Should Internet sales be taxed?” Based on 3,125 survey responses, 85% said no. Most politicians who have supported the expansion of Internet sales taxes have yet to publicly acknowledge the widespread constituent opposition or explain why they prefer this form of tax increase to other alternatives that are less despised by voters.

One of the reasons that Internet commerce continues to expand is that hard-pressed consumers in today’s economy increasingly buy more of the things they need on the Internet in order to save money. Many can only afford to buy used or refurbished products and they also save the cost of driving to the mall. This bill would increase the taxes on those least able to afford it and would deepen the recession.

Consumers buy the things they need on the Internet because the product selection is much greater. Online shopping also saves them time, because they don’t have to drive to the mall and deal with traffic on the way. Environmentally conscious consumers also prefer to leave their car in the driveway in order to reduce automotive air pollution. The products will be delivered by the U.S. postal carriers, UPS and FedEx trucks that go through our neighborhoods every day anyway. The reduced demand for gasoline also helps reduce gas prices, which benefits both consumers and businesses.

Raising consumers’ sales taxes in this economy is a bad idea, and would thwart business recovery and job creation. Businesses that are having trouble competing in a connected world should focus on honing their online marketing skills instead of expecting consumers to pay for their inadequacies. Wise shopping center owners are devoting their efforts to repurposing what are becoming the retailing buggy whips of the 21^st century instead of asking legislators to help maintain traffic jams on the roads and parking lots that serve them.

State and local governments have far less objectionable alternatives if they need additional tax revenues. Public opinion polls show that taxpayers object much less to increasing sin taxes or temporary surtaxes on the wealthy if needed to plug revenue shortfalls. There is also a much simpler and easier legislative solution that would remove the inconsistency in online sales tax collection. There are currently 56 state and local sales tax holidays in 16 states, and most states have permanent tax moratoriums on products such as prescription drugs. A permanent state and local sales tax moratorium on all Internet purchases would eliminate the inconsistencies. It would be supported by 85% of voters. This solution would also help the economy and the environment.