The Marketplace Fairness Act

The Marketplace Fairness Act is a bill that the United States Congress is currently considering. The bill states that companies with an online presence would need to collect State’s sales tax on the products they sell online. This bill does not impose any new taxes; rather the bill seeks to enforce taxes already established by the different states. The biggest quarrels among Congress revolves around the fact that not all States require sales tax and the implementation of this bill might hurt many small internet companies.

Proponents of the Marketplace Fairness Act argue that the bill will level the playing field for local business with a physical presence in States that require a sales tax. Many small local businesses have complained that many customers go to their stores to shop and find products, but then go online to buy it because it is less expensive to buy via the internet. Although the difference in price includes differences in overhead costs, one very large difference is State sales tax. The bill would make both types of businesses responsible for collecting the tax and would make the price differences more negligible. Supporters of the Marketplace Fairness Act also exclaim that the States are losing money. When online businesses don’t require the collection of sales tax, the customers are expected to report and pay this sum when they file their own taxes. Many don’t. With the poor economy, States are losing millions of dollars that could help and make a big difference to the State budget. That is money that could go to education, Health Care, the police force, and many other causes. Supporters believe that the Marketplace Fairness Act will do just what its name says; make the marketplace fair.

Opponents of the Marketplace Fairness Act argue that businesses in States that don’t require sales tax should not be responsible for the collection of said taxes for other States. These businesses would be required to pay for and use software to collect taxes for other states. “Montana businesses are not responsible for paying for the services and spending priorities in other states.” This act would also harm small businesses that might not have the extra funds or manpower to comply with the new bill and still be competitive in the marketplace. The bill would require the purchase of software and needed time in training to understand the new software and the bill’s components, time and money many small businesses do not have. Ebay is a very outspoken corporate antagonist to the Marketplace Fairness Act. Even though the bill makes small allowances for very small business, Ebay exclaims that it is not enough.  Ebay proposes that the bill only apply to businesses that make more than 10 million dollars annually in profit. Many of the congressmen not supporting the bill state that they are not entirely against the bill, but firmly believe that it needs to be redrawn so as to be fair and just for all parties. The public, as a whole, is not particularly thrilled about the new bill of course. Polls show that most consumers are not fond of the idea of paying more for the same product, even if those funds go to supporting the community they live in. Only time will tell how this new bill will affect our economy and tax legislation.

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