FreedomWorks' Kibbe: Internet Sales Tax Kills Innovation

The new Internet tax bill would stifle innovation and could start a slippery slope to a national sales tax, FreedomWorks President and CEO Matt Kibbe tells Newsmax TV.

The Market Place Fairness Act passed the Senate Monday with bi-partisan support. It would force online companies such as Amazon to collect local and state sales taxes. Supporters say it levels the playing field for brick-and-mortar stores since they have always had to collect such taxes.

Kibbe and others argue that brick-and-mortar stores have other advantages – "things like shipping and the immediacy of getting the products you want."

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It's the "big dogs" such as Amazon and Wal-Mart that are both Internet companies and brick and mortar companies who feel they can win in a heavily complicated, regulated world with multiple tax jurisdictions, Kibbe tells Newsmax. "Mom-and-pop Internet businesses can’t possibly comply in that world because they can’t afford to hire an army of lawyers and accountants to comply with something that not a single senator understands right now."

Kibbe blames the bill on "parochial interests and insider politics." Local and state governments are looking for ways to balance their budgets, he said, so they support the Internet sales tax bill.

"Unfortunately, we lost a number of Republicans on this and we have to do something about that to make sure that there’s enough attention once it goes to the House so we can stop it," he said.

Though Republicans typically oppose new taxes, Kibbe said this bill is complicated.
Then, there's the way it came through the Senate: "The Senate brought it to the Senate floor, first by passing the rule, it’s been done in a very nontransparent way. They bypassed the Senate Finance Committee, they didn’t give the American people or, frankly, members of the Senate, a chance to read and understand what it was they were voting on so the process itself smacks of the same kind of shenanigans you saw with Obamacare and the stimulus."

Tension between the business community, the National Governors Association and the interests within various states are currently playing out, he said. "What we haven’t seen is consumers and taxpayers and citizens weigh in on this fight. That changes the dynamic."
Kibbe doesn't agree that taxes are going uncollected. Rather, he says the bill would stifle innovation.

"The fact of the matter is that nothing stays exactly the way it was before. Companies and businesses and lines of products and everything else changes as consumer demand changes," Kibbe said. "We don’t want to do everything the way we did it before just because we did it that way. What you’re seeing is a democratization and liberation of consumers online where they can actually find what it is they want, whether it be at their local stores or someplace else, and that’s a good thing, not a bad thing."

What scares him, he said, is that once the federal government creates the infrastructure and forces local businesses to become tax collectors, that same infrastructure can be used to impose a national sales tax.

"And that, of course, is the difference between us and Europe where they both have income taxes and value added taxes and sales taxes," he said. "We don’t want to go that way."