David French, Senior Vice President of the National Retail Federation, the major  industry group lobbying for the so-called “Marketplace Fairness Act,” (more  aptly named the “National Internet Tax Mandate”) recently commented that “….the  law [governing Internet sales]  today is a 20th-century interpretation of an 18th-century document….”  Mr.  French’s comments are typical of those wishing to expand government power beyond  the limits established by the United States Constitution.

Those of us who insist the federal government remain within  the confines prescribed by the Constitution are used to condescending lectures  about how the Constitution is a “living document” whose principles evolve over  time.  I was even once informed by the then-Chairman of the House Committee  on Foreign  Affairs, who was widely considered one of Congress’ leading constitutional  authorities, that the constitutional requirement for a declaration of war was an  anachronism!

While Mr. French may not go that far, he is arguing that  Congress turn the Commerce Clause on its head by passing the Internet Tax  Mandate.  The Commerce Clause was intended to facilitate free trade by  giving the federal government limited power to ensure state governments did not  impose taxes  and regulations on out-of-state business.  Contrary to modern belief, the  Commerce Clause was not intended to give Congress power to regulate every sector  of the economy.  And the Commerce Clause was certainly not intended to  allow Congress to help state governments collect taxes on purchases from  out-of-state merchants.

The National Internet Tax Mandate overturns the Supreme  Court’s 1992 Quill v. North Dakota decision  that states can only force businesses to collect sales tax if the business has a “physical presence” in the state.   Quill represented a rare instance where the  Supreme Court properly interpreted the Commerce Clause.  Thanks to  the Quill decision, the Internet has  remained a tax-free zone, though some states require consumers to later pay  taxes on products they purchased online.  This freedom has helped turn the  Internet into a thriving and dynamic sector of the economy, to the benefit of  entrepreneurs and consumers.

Now that status is threatened by an alliance of big business  and tax-hungry state governments seeking new powers to force out-of-state  business to collect state sales taxes.  Far from updating the Constitution  to fit the needs of the 21st century, the  National Internet Tax Mandate is a throwback to  18th century mercantilism.

The National Internet Tax Mandate will raise the costs of  doing business over the Internet. Large, established Internet companies, such as Amazon,  can absorb these costs, whereas their smaller competitors cannot.  More  importantly, the Mandate’s increased costs and regulations could prevent the  creation and growth of the next Amazon.

Raising prices on goods purchased over the Internet will also  impose an additional hardship on American consumers, many of whom are already  struggling because of the troubled economy.  And giving ravenous state  governments new authority to tax sales made by out-of-state businesses  practically guarantees future sales tax hikes, as the arguments will be made  that most of the increases will fall on out-of-state businesses.  These  businesses will lack effective ability to oppose the tax increases — a form of  taxation without representation.

Contrary to Mr. French, it is the proponents of the National  Internet Tax Mandate who are embracing outdated principles, such as higher taxes  on prosperity, piling more regulations on already over-burdened workers, and  legislation designed to help entrenched businesses at the expense of their  smaller competitors and consumers.  Opponents of the Internet Tax Mandate  recognize that the principles of limited government and free markets represented  by a true reading of the Commerce Clause provide a timeless guide to economic  growth and prosperity.

—-

Click below to read the article on Business Insider’s website by Dr. Ron Paul, former Texas Congressmen and current Chairman of the Campaign for Liberty.

http://www.businessinsider.com/ron-paul-internet-tax-mandate-2013-5