Posted on April 29, 2013
On April 25, the U.S. Senate cast an important vote for states’ rights. The Senate’s vote to end debate on the legislation affirmed the idea that it is the prerogative of states to set their own tax policies – and to stop picking winners and losers in the marketplace, if they so choose.
That is what I argued in the U.S. Senate: That the states have the right to make these decisions under the Tenth Amendment to the U.S. Constitution. Many senators agreed, with 75 of them, a majority of each party, supporting a Senate amendment endorsing this idea several weeks ago, and 74 voting on April 22 to begin debating the bill.
The Marketplace Fairness Act would allow governors and state legislatures around the country to decide whether they want to collect sales and use taxes that are already owed on remote purchases, such as those made online or through a catalog. It would allow them to treat all businesses the same, requiring out-of-state sellers in Tennessee to do the same thing we require of in-state sellers, the brick-and-mortar businesses that currently face a price disadvantage in the marketplace.
Right now, for example, if you go in to the Nashville Boot Co. and try on a pair of boots and buy them, the store has to collect a sales tax and remit that to the state. But if you go into the store, select your boots and buy them online from an out-of-state business, that seller does not.
Our solution, the Marketplace Fairness Act, is an 11-page bill – a rarity in Washington. It doesn’t make any decisions for the states; it just says states can decide for themselves to collect from out-of-state sellers.
I trust Governor Bill Haslam and other conservative leaders of our state to make these decisions, and they shouldn’t have to play “Mother, may I?” with the federal government to do so. Among the other conservative leaders who support this are Art Laffer, President Reagan’s favorite economist; Al Cardenas, head of the American Conservative Union; the late William F. Buckley, Jr.; and a long list of current and former Republican governors.
Some people have said this is a new tax, or a tax on the Internet, but I’ve said they must not have read the bill carefully. There is a moratorium on taxing the Internet, and this bill does not change that. This legislation is about allowing states to collect state taxes that are already owed.
In Tennessee, state leaders like Governor Haslam want to avoid a state income tax, and lower taxes when they can. They’d also like to stop treating some businesses and taxpayers one way, and other businesses and taxpayers another.
My hope is that Congress continues to honor the Tenth Amendment, and the right of states to make these decisions, by passing the Marketplace Fairness Act.