Opinion
              Sen. Patrick Leahy, D-Vt., president pro tempore of the Senate, right, and Sen. Thad Cochran, R-Miss., left, walk to the floor of the Senate during a vote on legislation  to collect sales tax on Internet purchases, on Capitol Hill in Washington, Monday, May 6, 2013.  (AP Photo/J. Scott Applewhite)

The Marketplace Fairness Act will be as hard to implement as Obamacare

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McKane Davis
Co-owner, Scrapbook.com
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      McKane Davis

      McKane Davis is a co-owner of Scrapbook.com and co-founder of the eMainStreet Alliance, a grassroots organization consisting of more than 700 small businesses. Connect with him at eMainStreet.org.

The Supreme Court this week refused to hear a case about the legality of remote sales-tax collection requirements, shifting attention to the controversial Marketplace Fairness Act (MFA), a bill that is currently being pushed by big retail and other special interests in the U.S. House of Representatives. If Obamacare has been disruptive, just wait and see what happens if the MFA passes. The MFA would require tens of thousands of small businesses to become tax collectors for any state into which they make a single sale. Complex government-mandated software? Check. Crushing regulations and burdens for small businesses? Check. Hugely unpopular with the public? Check. Proponents lying to ram it through? Check. Obamacare and the MFA have a lot in common — in fact, you might call the MFA Obamacare’s evil twin.

Obamacare’s healthcare.gov website rollout failed because it has proven impossible to integrate all the different software pieces required to make the website work. The federal government spent over $700,000,000 and took three years to integrate the government software and it still was an unmitigated disaster. The MFA would foist complex software integration requirements onto small businesses and give them no budget and a short six month deadline to do the integrations. Then it would would subject them to expensive time-consuming government audits. And if they make mistakes with their software integration, they will face hefty fines and penalties.

The government-mandated software required under MFA is complex and it’s costly for businesses to integrate. It requires not just integration into online shopping carts and custom order management systems, but also related applications such as accounting programs which often have to be upgraded at costs of tens of thousands of dollars. Compliance costs to my business would be over $80,000 in the first year alone. In what marketplace is that fair? Furthermore, the sales-tax software cannot handle multi-channel sales, catalog sales or mail order sales which are essential to the livelihoods of tens of thousands of small businesses like mine.

Six hundred small businesses from the group eMainStreet recently wrote Congress that the cost to integrate the software and related compliance falls between $20,000 and $300,000 in the first year for each business. The costs exceed the annual profits of many of them. These estimates are based on actual bids and have been supported and confirmed in an unpaid, non-commissioned study published by TruST. If Congress feels the need to make remote-selling businesses tax collectors, any solution ought to be simple enough that mandatory software is not needed and small businesses do not face audit threats. And it should apply to all businesses of all sizes regardless of business model or net revenue.

The Obamacare website has many security and privacy flaws and experts continue to warn that the site is not safe; how confident are we that government software for the MFA would be secure and guard people’s privacy? In 2012, tax data at the South Carolina Department of Revenue was compromised due to a security breach and 3.6 Million people’s personal information was stolen. Plus, if the sales tax software is hacked, not only would consumer data be compromised, but it could also compromise the online stores of tens of thousands of businesses and cause them to over- or under-charge their customers.

Just as health insurance is getting more expensive under Obamacare, products would get more expensive under the MFA. In a recent, non-commissioned study by McGladrey LLP, over 90 percent of businesses surveyed said they would have to pass on MFA compliance costs to consumers meaning that prices would go up. With a record number of Americans out of work, the last thing we need are more government-induced price increases.

President Obama and other proponents of Obamacare repeatedly misled the American people in order to get Obamacare passed. They said, “If you like your plan, you can keep it.” We found out the hard way that wasn’t true. Proponents of the MFA are engaged in an equally dishonest campaign. They claim that that integration of the government-mandated software is “free and easy” when in reality it is neither. They claim that the the MFA will create over 1.5 million jobs, a claim that has no basis.