The so-called “Marketplace Fairness Act” passed the Senate today on a 69-27 vote, meaning that businesses with more than $1 million in sales will be subjected to tax collection laws no matter where they’re located in the United States. The bill would give state governments the blessing to collect tax on retailers across state lines.

Andrew Moylan of the R Street Institute ran down some of the major problems with the bill and detailed some of the straw men arguments used by the tax legislation’s proponents:

MFA would close a tax “loophole” – Supporters often say that the MFA exists to close a 20-year old “Internet loophole,” to stop government from “picking winners and losers” among different types of retail businesses. But there is no loophole and government isn’t attempting to advantage one type of business over another. The 1992 Supreme Court decision Quill v. North Dakota is what established current law, which says that a state can only force a business to collect its sales tax if it is physically present within its borders. That’s the law for online and traditional retailers alike.Some, like Walmart, chose a business model that included a physical retail storefront in every state and they’ve benefited handsomely from their ubiquity and uniform shopping experience. Some, like Overstock.com, have chosen a business model that (generally) included a web interface instead of a physical store, with a handful of warehouses across the country to facilitate shipping to consumers. It should be incumbent upon legislators to treat them consistently under existing rules, NOT to equalize their tax burdens at the end of the day.

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