As the holiday shopping season approaches, consumer may find an unlikely adversary: the retail industry. According to reports, “big retailers like Walmart and Apple ramp up their holiday ads early this season” and “Representatives from leading retail associations name online sales tax legislation as a chief concern for their members right now.”
That’s right, the retail industry is targeting online Christmas shopping.
What proponents misleadingly call the “Marketplace Fairness Act” would significantly increase the cost of buying goods on the Internet. The bill would force online businesses to collect and remit sales tax based on each customer’s location. Put another way, it would turn small, online businesses into tax collectors for states in which they have no real connection. Sen. Max Baucus (D-MT) called it a “clear infringement on states’ rights that we cannot stand for.”
Even more alarming is the possibility that California tax bureaucrats could audit a Wyoming-based Internet business if they believed the business was not remitting the proper amount back to California. To protect themselves from overzealous tax bureaucrats in revenue-starved states, Internet-based businesses would likely hire expensive lawyers and accountants to deal with burdensome paperwork and complex tax laws. America has nearly 10,000 taxing jurisdictions and even though bill would require some streamlining, those businesses would still face the threat of 47 out-of-state audits.
A new survey by accounting firm McGladrey found 98-percent of businesses “would pass along increased compliance costs to the consumer.” That is bad news for consumers, but it is exactly what many in the retail industry seek. The Retail Industry Leaders Association’s Jason Brewer told Politico, “Retailers big and small are rowing in the same direction to make this the last holiday season online-only retailers get special tax treatment over Main Street.”
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