Nothing is “Fair” About Congress Changing the Rules on Businesses After Twenty-One Years

Guest Post by David Addington, The Heritage Foundation

To hear the brick-and-mortar businesses complain of the need to enact S. 743, the so-called Marketplace Fairness Act, you would think that the Constitution entitled every brick-and-mortar store to a successful business model in perpetuity.  The legislation, on which the Senate will act shortly, authorizes states to order out-of-state businesses to collect their state’s sales tax on sales over the Internet.  The legislation overturns the existing rules in the free market, to the benefit of the brick-and-mortar businesses over their competitors.

The rules concerning sales by catalog, telephone, or Internet by out-of-state businesses that have no facilities or employees in a state have been clear for 21 years.  In 1992, the U.S. Supreme Court decided in Quill Corporation v. North Dakota that states cannot force such out-of-state sellers to collect the state’s sales taxes on those remote sales. The proponents of S. 743 want Congress to change the rules that have existed for 21 years so that brick-and-mortar companies have a new government-provided advantage over the Internet-oriented companies.

Millions of business decisions have been made in the free market over those 21 years by businesses of all kinds, choosing whether and to what extent they would rely in their sales of goods and services on physical facilities such a stores and showrooms and whether and to what extent they would rely on catalogs, telephone solicitations, or sales over the Internet.  Many companies have chosen one model or the other, or combinations of the two, to sell their products and services. All those companies have had the opportunity to compete in the marketplace under that stable set of rules set forth in Quill. Apparently, many of the businesses that chose the brick-and-mortar business model are now feeling the heat of free market competition, so they want government to change the rules to favor the brick-and-mortar business model.

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Morning Action: Tax Day

OBAMA TAX DAY.  It would be futile for the Left to try to deny how central so-called class warfare is to being President Obama.  That is what he ran on and won his presidential elections – pitting Americans against Americans.

For Obama, this spring’s fights over class represent both a political challenge and a definitional moment. His most consistent argument — that higher taxes on the well-to-do are the essential element in preserving popular government benefits to the middle-class and poor — is in tension with his most consistent promise, that his presidency will break Washington gridlock and elevate problem-solving over ideological purity.

However, President Obama’s policies have not helped the middle class, and it is untrue that only high income earners have seen their taxes increase during his time in office – the middle class has as well.   His tax hikes are harmful to the economy and to all classes of Americans. 

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Morning Action: Disobey the Hastert Rule, We Pick Up the Tab

GUNS.  Today at 11 am, the gun legislation a handful of Senators have been working on will be revealed, but in Washington, getting things done does not equal making things better:

Sens. Joe Manchin (D., W. Va.) and Sen. Pat Toomey (R., Pa.) hope to announce a deal Wednesday and are just working out legislative language, an aide close to the negotiations said Tuesday night. The two lawmakers scheduled a press conference for Wednesday morning, according to advisories issued by both offices.

The deal under discussion would expand background checks for people buying guns from unlicensed dealers in commercial sales online and at gun shows, according to the aide. Currently, only federally licensed dealers must conduct background checks and keep paper records of the sales. The lawmakers agreed to exempt sales to immediate family members and some hunters from the new requirements.

Mr. Schumer and Sen. Mark Kirk (R. , Ill.) also participated in the negotiations.

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Morning Action: Rest in Peace, Lady Thatcher

IRON LADY.  Rest in peace, Lady Thatcher.  Must watch video via Heritage:

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But Where Have All the Jobs Gone?!

Before you rush to celebrate last month’s unemployment rate that ticked down to 7.6 percent from 7.7 percent, consider what has happened to labor force participation.  The labor force participation rate fell to 63.3 percent, its lowest level since 1979.  In fact, Austan Goolsbee, former chair of President Barack Obama’s Council of Economic Advisers, called the March jobs report a “punch to the gut.”

Of course, the White House is singing the same old tune: it’s the sequester’s fault!  But Heritage Foundation experts predicted this reaction last month when they explained:

Looking ahead, policymakers need not fear slower job growth due to the recent sequestration, which will force the federal government to cut $85 billion in budget authority this year. That will slow the growth of 2013 spending by only about $42 billion.

The federal cuts from sequestration, which will be enacted gradually over the next two years, should not negatively impact private-sector job growth. Economists Alberto Alesina, Carlo Favero, and Francesco Giavazzi have found that spending-based corrections are followed by little decline in gross domestic product (GDP), with recovery following within a year.

The Obama administration wants to replace the sequester with a so-called balanced approach; however, their idea of balanced is more taxes and ultimately more spending.  Increased taxes – like the higher payroll taxes imposed upon us by the fiscal cliff deal – will not contribute to economic improvement. 

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