The Remote Transactions Parity Act
August 5, 2015
The newest proposal to impose online sales taxes across state borders is the Remote Transactions Parity Act of 2015 (RTPA). The RTPA bears several similarities to the highly criticized Marketplace Fairness Act (MFA), and it would dramatically expand the taxing powers of states by allowing them to impose sales taxes on consumers residing in other states.
RTPA overrides important tax precedents and harms consumers by:
- Weakening the physical presence standard for sales taxes, effectively reducing states' accountability to taxpayers and burdening consumers with added costs.
- Allowing one state to tax a resident of another state, and as a result undermining tax competition between states.
- Forcing online retailers to comply with the nearly 9,600 different taxing bodies in the United States.
- Keeping the small seller exception at only $1 million of annual receipts.
Additionally, RTPA is unfair to online retailers because local retailers benefit from government services such as roads; police, fire, accident and disaster protection; and utilities delivered over money-saving public rights of way. Out-of-state retailers get none of these.
Instead of forcing out-of-state businesses to serve as government tax collectors, Congress and state legislators should improve the existing sales tax system, which is based on where the product was sold, known as an origin-based tax system. This would truly level the playing field, with both online and bricks-and-mortar retailers paying the same tax.
Source: Matthew Glans, "Remote Transactions Parity Act," The Heartland Institute, July 10, 2015.
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