Capitol Hill is the domain of big business and big government. And the two collude in ways you would never hear about in your local newspaper.
I call it the great conflict of interest. Senators are elected to represent you; but in reality, they just represent the big corporate donors who fund their campaigns.
This week, the great conflict of interest was on display as the U.S. Senate voted 60 to 30 in favor of the so-called “Marketplace Fairness Act.”
Just after the vote, Senator Dick Durbin of Illinois said, “We look forward to passing this landmark bill in 11 days and call on the House to stand up for America’s Main Street businesses with us.”
But does Mr. Durbin really have Main Street’s best interest in mind? The short answer is no. You see, the company making the biggest push for the Marketplace Fairness Act is none other than… Walmart (WMT).
Yes, the same Walmart that has been eating the lunch of “America’s Main Street businesses” for decades.
During that time, the one place small businesses have been able to compete against big box stores is online. With online sales, small businesses weren’t required to collect taxes from any tax district outside of their own. Naturally, Walmart – with locations all over the country – has wanted to kill this single competitive advantage for years.
Surprisingly, it was another large retailer, Amazon (AMZN), that had been blocking Walmart’s way. Now, though, times have changed. Amazon has grown and built warehouses across the country; and they, like Walmart, now have a physical presence in more states. Not coincidentally, they’ve surrendered the fight and no longer oppose internet sales taxes.
So Walmart and Amazon, united for the first time, can now use their stooges in Congress to kill what’s left of small-time retailers.
Marketplace Fairness Debunked
The Marketplace Fairness Act, despite its name, is anything but fair for consumers.
It’s actually a dramatic change to the rules of interstate commerce. Currently, online retailers only collect taxes for the state in which they reside. But, for the first time in America’s history, states will be able to reach outside their jurisdictions to tax businesses with no physical presence inside their borders.
What “Marketplace Fairness Act” champions claim as a “loophole” is actually the “physical presence standard,” a firmly established constitutional doctrine the Supreme Court has preserved for decades to protect businesses and their buyers from predatory tax collectors.
The physical presence standard safeguards taxpayers from many types of belligerent tax policies that could affect income, property, and other taxes.
But the Senate has decided to conveniently circumvent the standard. In fact, many Senators support the Act simply because it helps their home states collect more taxes.
But “tax and spend” is not the way to budget state economies. Rather than going for cash grab after cash grab, states need to slash expenditures to get their budgets balanced.
The states with the healthiest economies have pursued free market reforms, eliminated waste, and controlled the growth of government to create competitive economic climates. These policies attract businesses, jobs, and workers.
The Marketplace Fairness Act, on the other hand, nullifies an important aspect of that competition by doing away with the long-held physical presence standard for taxation.
The Bottom Line
Once again, the partnership between big government and big business is working to confiscate more of the hard-earned dollars in your pocket. They want to squeeze every penny they can out of you.
But stay tuned… It’s up to the House of Representatives to vote on the bill next. Barack Obama has already pledged to sign the bill if it makes it to his desk; so for the everyday consumer, it’s all on the House.
This article originally appeared at CapitolHillDaily.com and is reprinted here with permission.
Photo Credit: DonkeyHotey (Creative Commons)