Guest writer

Another cash grab

Internet tax bad for us, business

Do you shop online for good deals and savings? If so, I have some bad news: those deals might not be around much longer. Got a small business that sells products online? There's bad news for you, too. Droves of people from all over the country may soon come calling.

But they won't be customers--they'll be tax collectors.

Such is the predicament facing hardworking Arkansas consumers and small-business owners--and legislators from both sides of the aisle are working to promote it. One of Arkansas' congressmen, Rep. Steve Womack, recently co-sponsored a new bill called the "Remote Transaction Parity Act," which will slap burdensome new taxes on online shopping.

Congress has tried to push harmful Internet sales taxes before. Rep. Womack also introduced the similar "Marketplace Fairness Act" in the last session of Congress. That version of the sales tax would've cost taxpayers up to $23 billion a year. Fortunately, that bill never passed, but now elected officials are trying to sneak by yet another Internet sales tax under a different name.

Here's how it works. The Remote Transaction Parity Act (RTPA) requires online retailers to collect sales taxes based on their customer's location. For example, If you live in Fort Smith and buy online from a Florida-based vendor (or another vendor that does not have physical presence in Arkansas), that vendor would have to charge you the 6.5 percent Arkansas state sales tax, the 1.25 percent Sebastian County tax, and 2 percent for Fort Smith.

So much for savings. Arkansans already face the second-highest combined state and local sales-tax rate in the country, and this law would force us to pay these taxes on all items we buy online, regardless of where the seller is. This is especially bad news for people on a fixed income, such as senior citizens.

But small-business owners would be hardest hit.

In the 21st Century, the Internet is the most important place to attract new customers, but if the RTPA passes, it will be the best place to attract the attention of tax collectors. Online vendors would be responsible for tracking and collecting sales taxes for 46 states, not to mention counties, cities, and even territories across America. Texas, for example, has 1,515 different tax jurisdictions. Across the nation, there are nearly 10,000 of these different tax jurisdictions.

Worse, this would expose hardworking businesses to audits and scrutiny from tax collectors across the country. If you think dealing with the IRS is bad, try dealing with at least 46 of its cousins.

Suffice it to say, this isn't what Arkansans need.

Supporters of Internet sales-tax plans, including RTPA, say free tax-calculating software would make the burden manageable. According to a report by experienced E-marketers, however, the cost of setting up this "free" software ranges from $80,000 to $290,000 in year one, and up to $260,000 every year after that to maintain it. And as the rules and tax codes change in states and cities across the country, updates would be constantly needed.

Arkansans are not on board. One recent survey found that nearly 60 percent of our state wouldn't vote for this kind of Internet sales tax if it was up to us.

Members of Congress who are eager to tax Internet sales are clearly out of sync with the rest of Arkansas on this issue. Internet sales-tax plans like RTPA cost you and your family more money while treating all online vendors as though they were "big-box" retailers with an army of lawyers and tax accountants, forcing them to pay taxes in states and cities they may never set foot in.

It's nothing more than another cash grab by tax-hungry politicians.

If Congress and state governments like ours are really interested in fairness, they should simplify or reduce sales taxes across the board. Slipping a higher tax bill into our online shopping cart isn't the answer.

David Ray is the Arkansas state director of Americans for Prosperity.

Editorial on 07/18/2015

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