MITFA: A Bill to Level the Playing Field for Small Businesses

MITFA: A Bill to Level the Playing Field for Small Businesses

By Alex Gladu, Independent We Stand

In a world dominated by big brands and homogenous strip malls, small businesses stand up for our local communities and economies. Now, it’s time for Congress to stand up for our small businesses by supporting the Marketplace and Internet Tax Fairness Act (MITFA). A bipartisan bill in the Senate, MITFA would close tax loopholes that currently exempt online-only retailers from collecting state and local sales tax. It would also maintain the ban on taxing Internet access. MITFA was introduced earlier this summer by Senators Mike Enzi (R-WY), Dick Durbin (D-IL), Lamar Alexander (R-TN), Heidi Heitkamp (D-ND), Susan Collins (R-ME) and Mark Pryor (D-AR).

When online retailers don’t have to collect state and local sales tax, local communities lose out on valuable revenue and business opportunities. Online retailers profit from purchases made in the community, but they don’t give anything back. Instead, they divert their profits to out-of-state headquarters, and they divert customers away from brick-and-mortar businesses in the community that do have to collect the extra sales tax. According to Advocates for Independent Business, the current exemption for online retailers places small brick-and-mortar businesses at a five to 10 percent disadvantage in the competition to offer low prices. When this happens, the local businesses struggle to compete, and they are unable to create local jobs and return revenue to the local economy.

It’s not about creating a new tax, and it’s not about cutting certain businesses a break. Rather, MITFA is about closing an unfair tax loophole and enforcing the existing tax code equally among all businesses. This small change would level the playing field for small businesses, making their prices and their inventories more competitive – and better for local economies, in the long run. It’s also important to note that the law would only apply to online retailers with annual nationwide remote sales of more than $1 million, so as not to target small online retailers who struggle to keep up with giants like Amazon.

A similar bill, the Marketplace Fairness Act (MFA), was introduced in both the House and the Senate in 2013. This version did not include the provision about prohibiting Internet use taxes, but still pushed to close the tax loophole for online retailers. Although the MFA remains stuck in committee in the House; the Senate has passed this bill with strong bipartisan support - 69 of the 100 votes.

With MITFA, there is renewed hope for small brick-and-mortar businesses. The bill has already seen bipartisan support, evidenced by the long list of co-sponsors from both sides of the aisle. Despite the challenges of the 2013 bill, these supporters are determined not to let marketplace fairness fall off Congress’s agenda.

Ultimately, the passage of MITFA would allow states and localities to charge sales tax on online purchases, thereby ensuring that brick-and-mortar small businesses get a fair chance at doing business and supporting the economy. With a level playing field, local businesses are better able to create local jobs, support local causes and return their profits to the local economy. To stand up for the small brick-and-mortar businesses in your community, contact your senators in support of MITFA today.


About the Author

Alex is a senior at the University of North Carolina at Chapel Hill, where she is double-majoring in Public Relations and Spanish.  Since becoming a writer for Independent We Stand, she has fully adopted the ‘buy local’ lifestyle.  Her favorite indie business is Sugarland, a bakery in Chapel Hill, N.C, where she has been known to go a little cupcake crazy. She hopes to attend law school and pursue a career in nonprofit or political communication.

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