Study: Majority of Consumers Hate the Marketplace Fairness Act

May 15, 2013 -

If the Marketplace Fairness Act that was enthusiastically passed in the Senate earlier this month were to somehow end up becoming the law of the land (through some sort of divine intervention in the House where it will likely stall for lack of support, in my opinion) then 44 percent would cut back on buying products online. This is according to data from a study sponsored by electronic postage software company Endicia and posted on Mashable.

The study also found that 75 percent of participants ages 18- 25 would cut back on Internet buying and instead shop at local brick-and-mortar stores. This is interesting because that is exactly what members of the National Retail Federation were hoping to hear. The trade group that represents traditional brick-and-mortar retailers has long argued that online retailers have an unfair advantage over traditional retailers because customers don't have to pay sales tax..

Overall 61 percent of participants said that they disagreed with the Marketplace Fairness Act (MFA), while 39 percent had a favorable reaction. Around 60 percent said that they believe that the bill becoming law would be bad for economic growth. Finally 42 percent of respondents who identified themselves as Democrats agreed with the bill, while 34 percent of Republicans said the bill was a good idea.

Mashable offers an infographic with other interesting data here.

 


Comments

Re: Study: Majority of Consumers Hate the Marketplace ...

Well, bad for the consumer, so, it seems this will likely ass.

Re: Study: Majority of Consumers Hate the Marketplace ...

Well, yes, of course consumers will generally be against it.

Even if the law was implemented in an actual fair way, not putting any significant technological or beurocratic burden on online retailers and purely leveled the field so that online vendors did not have a price advantage due to consumers not paying their sales tax.. even with that, people are generally not in favor of things that help others and hurt them.  We are a very 'me' oriented culture, so anything that results in higher prices people will generally be unhappy about, regardless how fair or economically advantageous something is.

Re: Study: Majority of Consumers Hate the Marketplace ...

When they introduce a fair sales tax bill, let me know. I haven't seen one yet.

Also, the only way to prevent one company from having a price advantage over another is to implement a price floor and other controls, and those are very bad for the markets.

Re: Study: Majority of Consumers Hate the Marketplace ...

One does not need to go as far as wiping out _all_ price advantages or implementing price controls.  

This is a very specific advantage.  Two companies selling identical products to the same consumer, one has to charge a tax on the sale, the other one does not.  The consumer is supposed to pay their tax on the sale but the law is so widely ignored it is a joke.

Part of the ideological problem is what is seen as an unfair advantage by one entity can be seen as their due by another, and it is the government imposing this difference one way or another.

In theory a 'fair' way of handling this would be if local tax collectors were able to access credit card records and were allowed to start banging on the doors of consumers who were dodging their local taxes, but people have become accustomed to ignoring that rule so there would be mass outrage if that happened (on top of the privacy issues of course).  

At the end of the day, 'fair' is so subjective as to be irrelevant.

Re: Study: Majority of Consumers Hate the Marketplace ...

This is a very specific advantage.  Two companies selling identical products to the same consumer, one has to charge a tax on the sale, the other one does not.

Except that is not the only advantage between the online store and the brick and mortar store. Sales tax is pretty low on the list of economic advantages of an online retailer that lets it charge a lower price. 

The consumer is supposed to pay their tax on the sale but the law is so widely ignored it is a joke.

Then get rid of the law. If the law is unenforceable, then why is it law?

At the end of the day, 'fair' is so subjective as to be irrelevant.

And yet there are ways to approach this that would not cause undue economic harm to online based businesses and put them on fair footing with brick and mortar companies. Sadly, no one with authority to pass such a measure are considering them.

Re: Study: Majority of Consumers Hate the Marketplace ...

Are you referring to what the television manufacturers are doing by setting a minimum price point as a result of U.S. Supreme Court 2007 - Leegin Creative Leather Products v. PSKS?  As a result of this, I am much less likely to periodically upgrade my TV, because now I am paying as much as 30-40% more.

Re: Study: Majority of Consumers Hate the Marketplace ...

There's that but also other laws such as one in Oklahoma that says that retailers have to charge 6% or more over wholesale for all their products. Thankfully, that law is being repealed if it hasn't already.

But in general, the practice of forcing price floors on retail fails as it destroys competition. If the government wasn't the one demanding them, we would be charging the retailers with racketeering charges.

Re: Study: Majority of Consumers Hate the Marketplace ...

The funny thing is that there is nothing "fair" about this so called fairness act.

Consider this: A local brick and mortar has to monitor and pay the sales tax for only the tax jurisdiction it operates in.

An online retailer, however, will have to accommodate somewhere in the range of ten thousand different tax codes for each tax jurisdiction in the United States of America. Imagine the cost in money and man hours in compliance hell trying to be in compliance with the tax codes for (what I believe is) 45 states and their local tax jurisdictions; and further being subject to audits from 45 different states.

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Papa Midnight

Re: Study: Majority of Consumers Hate the Marketplace ...

"An online retailer, however, will have to accommodate somewhere in the range of ten thousand different tax codes for each tax jurisdiction in the United States of America. Imagine the cost in money and man hours in compliance hell trying to be in compliance with the tax codes for (what I believe is) 45 states and their local tax jurisdictions; and further being subject to audits from 45 different states."

The law as passed by the Senate actually answers that question: zero additional cost, zero additional man-hours. If a state signs on to the relevant agreement, they are required to provide, at no cost, software that will do all of that for them. Otherwise, the seller isn't required to collect use tax.

Seriously, 99 percent of the whining that I've seen comes from a gross misunderstanding of both what is already legally required and what the law would require. (Yes, there are valid arguments against the Act, I'm not trying to claim otherwise. The problem is, they're pretty much all drowned out by "waaah i can't dodge taxes anymore".)

Re: Study: Majority of Consumers Hate the Marketplace ...

The law as passed by the Senate actually answers that question: zero additional cost, zero additional man-hours.

And here you show that you have no clue about programming or accounting. It still takes time, money and man hours to integrate that free software from the states into your point of sales software. It still takes time, money and man hours to calculate and disperse those sales taxes. It still takes time, money and man hours to deal with audits every year.

Otherwise, the seller isn't required to collect use tax.

Wrong again. You just aren't liable for collecting the incorrect amount of tax.

Seriously, 99 percent of the whining that I've seen comes from a gross misunderstanding of both what is already legally required and what the law would require.

And 99% of supporters of the bill have no idea how to run a business and how this bill if it becomes law would negatively affect small businesses.

Re: Study: Majority of Consumers Hate the Marketplace ...

And deal with the flux in those codes. There's the "tax free" weekends in various jurisdictions at various times that cover different items.

 

Re: Study: Majority of Consumers Hate the Marketplace ...

The study also found that 75 percent of participants ages 18- 25 would cut back on Internet buying and instead shop at local brick-and-mortar stores.

That is interesting. I wonder how long until those same people realize that even after adding sales tax, the items they buy online would still be cheaper than the local offerings.

Re: Study: Majority of Consumers Hate the Marketplace ...

hooray for oregon :)

 
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