Marketplace Fairness? Not close

They call it the “Marketplace Fairness Act” because they can’t call it what it is — the “Sales Tax Protection Act.”

This proposal to force larger retailers that do business on the Internet to collect sales taxes from their out-of-state customers is not only odious and obtuse, it is an insult to common sense.

But that didn’t stop the United States Senate from passing the bill by a whopping 69-27 vote. Now, the U.S. House is the last hope for protecting businesses from the onerous burden of collecting taxes for as many as 9,600 different taxing jurisdictions.

The idea is that a business that sells online should collect from their customers the sales tax that the customer would have paid if they bought the item in their hometown.

Thus, if the customer lives in a state with a 5 percent sales tax and a city with a 2 percent sales tax, the retailer in Montana (which has no sales tax) would be obliged to collect an extra 7 percent from the customer and forward it to the state and locality where the customer made the purchase.

Multiply that by thousands of customers in 50 states and hundreds of cities and Indian reservations with local sales taxes and what you have is mass confusion.

Where the customer lives should not be relevant. The transaction is taking place in the state where the retailer is located, isn’t it? That’s where the product is sold from, and that’s where the money is going, so why punish the consumers by making them pay the tax that applies in their home state. They have intentionally chosen NOT to shop in their home state. Of course, states with sales taxes don’t like that choice because it means they have lost revenue, but freedom of choice is a fundamental right that should not be abridged for the convenience of the state.

If taxes have to be collected by online sellers, they should be forced to collect the applicable taxes that they would charge if someone walked in their front door — namely the state and local taxes that apply where these companies choose to do business.

Thus, Montana businesses would continue to charge all their customers zero percent for sales tax, and New Jersey businesses would charge all their customers 7 percent sales tax plus whatever ungodly amount that their home city assessed on top of that (up to 7 percent more)!

If people wanted to pay an extra 14 percent to buy a product from New Jersey instead of from Montana, they would be free to do so, but in the meantime we would be creating an incentive for governments to cut tax rates and thus benefit all their citizens.

It is no accident that Montana’s two senators and one U.S. representative are leading the fight against the Internet sales-tax bill. Our state has opted not to impose the burden of sales-tax collection on our businesses. We certainly don’t want the feds to jump across our state’s border and dictate policy to us that is against our own values and traditions.

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Editorials represent the majority opinion of the Daily Inter Lake’s editorial board.