The following was also featured at the John K. MacIver Institute for Public Policy.
The Marketplace Fairness Act was recently approved in the U.S. Senate. It now faces a tougher road ahead in the House.
Among other things, the Marketplace Fairness Act seeks to "level the competitive playing field" by allowing states to collect sales tax on all online sales. Presently, only businesses with a nexus (i.e., physical presence) in a state are subject to online sales taxation. If passed, the bill would change that. No new taxes would be implemented, but existing taxes would be assessed in additional ways.
While many business owners and anti-tax activists wholly reject the proposal, others support it. Among the supporters is Alan Rudnick, owner of Rudnick Jewelers in Sheboygan, who said in an interview with the Milwaukee Journal Sentinel, "We start out automatically at a 5% disadvantage, and we just would like a level playing field."
Congressman Paul Ryan also supports the Marketplace Fairness Act. "To me, I think the concept is right," Ryan said. "It's only fair that the local brick-and-mortar retailer be treated the same as the big-box online sales company out of state."
On the contrary, the act is antithetical to the free market principles Ryan professes to uphold.
The free market rewards innovators — those who invent new things, optimize efficiency, elevate quality, and reduce cost, including by deft avoidance of state influence. It was the respite from Leviathan that contributed to the growth and profitably of online retail; its tax-free nature allowed the fledgling industry to emerge from the ashes of the dot-com bubble.