Congress should pass e-fairness legislation |
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Congress should pass e-fairness legislation

Just over a year ago, on May 6, 2013, the Senate passed a pro-growth tax reform bill called the Marketplace Fairness Act. This “e-fairness” legislation would restore fairness to the retail marketplace by closing a loophole in our tax system that allows Internet-based businesses to avoid their responsibility to collect and remit the appropriate state sales taxes. The current system also disadvantages the local small businesses that are often the backbone of our communities.

However, since that day, the House of Representatives has been slow to follow in the Senate’s footsteps. For the well-being of America’s local businesses — as well as taxpayers, our economy and our communities — it’s time for the House to act.

The concept of e-fairness is hardly new — in fact, this issue has been debated for the past 20 years. In that time, Congress has held no less than 30 hearings on the matter.

E-fairness simply means all businesses — large or small, online or down at the corner — should be treated equally. And equal treatment means that if one type of business must collect sales tax, all other types of businesses must be held to the same standard. Anything short of that is government favoritism.

When we allow outdated government tax policy to dictate winners and losers in the marketplace, we jeopardize the entire free market system upon which this country was built. That’s why a growing chorus of conservative voices has joined the fight to close this online sales tax loophole, myself included. At its heart, e-fairness is about three basic conservative principles: preserving the free market, strengthening states’ rights and lowering taxes.

You read that correctly. Passage of the Marketplace Fairness Act — or similar legislation — would not only revitalize our economy, but it would actually give state leaders a rare opportunity to lower tax rates.

Noted conservative economist and former adviser to President Reagan Dr. Art Laffer, in his 2013 study “Pro-Growth Tax Reform and E-fairness,” found that closing the online sales tax loophole would allow states to put into place pro-growth tax reforms to stimulate the economy, create jobs and lower taxes. According to his estimates, Pennsylvania could add over $15.1 billion to the GDP and create nearly 44,000 new jobs in 10 years once Congress passes e-fairness and the state offsets the new revenues with a sales tax reduction of the same size.

Already, Utah, Wisconsin, Ohio and Idaho have proven Laffer’s theory correct. Each of these states has passed laws or budgets that would lower income tax rates once Congress passes e-fairness.

At least 12 other states are considering similar proposals. However, until the House takes action to draft and pass its version of e-fairness, these and other states considering similar measures are at a standstill.

Pennsylvania’s elected officials — from the state Legislature to the congressional delegation — should rally behind e-fairness and find a way to pass this much-needed legislation.

The Senate has already overwhelmingly passed the Marketplace Fairness Act. The House has delayed long enough.

For the sake of a true, free market and the future of America’s small businesses, Congress must find a solution to level the playing field once and for all.

Colin Hanna is president of Let Freedom Ring, a taxpayer advocacy organization.

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