Senate Passes the Marketplace Fairness Act, What’s Next?

The Senate recessed on April 26,  and one of their final pieces of business was to vote on cloture for the Marketplace Fairness Act (MFA), a vote that did reach the needed threshold to gain cloture, thus ending debate on the bill. The final vote was then scheduled for Monday May 6, and lawmakers returned to DC and the Senate began the final vote late yesterday afternoon.  The legislation unfortunately passed by a 69-27 vote.   The Taxpayers Protection Alliance (TPA) has written in the past about MFA and why the proposed law is not good for business (click here).  There are also a number of free market and taxpayer groups opposed to the bill on the premise that any new taxes will hurt the economy and prove to be unfair for on line businesses. Even with that strong case against MFA, a majority of Senators voted to increase taxes on small business and raise the cost of goods and services on the consumer.

The lead Republican on MFA in the Senate was Sen. Mike Enzi (R-Wy.), who has insisted that his version of the bill is better than previous incarnations on the basis that provisions inserted will not impose ‘new taxes’ on business. However, according to the R Street Institute, when you look at the bill’s language the figures tell a very different story: Those businesses who make less than $1 million in profits per year will be able to have an exemption from the law but in all fairness (pardon the pun), the cost of business for those who are making $1 million will average out to a net profit which couldn’t possibly handle the near 10,000 different tax jurisdictions it will be compelled to follow. The truth is that many of these business are just starting and looking to grow so that they will have a chance to be competitive in the free market, but once you start imposing more fees you are damaging the potential for those who worked hard and invested to be able to increase their profits and improve their business. This is not smart, nor is it a productive way to encourage those looking to start their own business.

The focus now moves to the House and we will watch and wait to see if the legislation will be taken up now that the Senate has passed their version. There are many battles looming on Capitol Hill on potential legislation that is coming down the pike (i.e. Immigration, the Farm Bill, etc.) and whether or not the House chooses to add this issue to the list is undetermined at this point.  Unfortunately, there is similar legislation that has been proposed in the House by Reps. Steve Womack (R-Ark.), and Jackie Speir (D-Calif.) to help push this tax increase over the finish line for the President’s signature.  While they are a long ways away from having the votes needed to pass their bill, they do have 60 co-sponsors and the support is bipartisan. The most important individual in the House in terms of this legislation moving forward may not be Speaker John Boehner (R-Ohio) nor Majority Leader Eric Cantor (R-Va.) but House Judiciary Chair Bob Goodlatte (R-Va.).  According to National Journal, Rep. Goodlatte could make or break any legislation in committee should we get that far and he has been traveling his district speaking to small business constituents to get their take on this issue.

TPA is strongly opposed to the Marketplace Fairness Act and we will continue to call attention to this issue.  The Senate’s passage of a bad bill was just the beginning and those who are interested in real ‘Fairness’ will continue the fight against legislation that hurts taxpayers, entrepreneurs, consumers, and the economy.