The North Dakota Taxpayer’s Association and the National Taxpayer’s Union have come out strongly against the Main Street Fairness Act arguing that it’s bad for internet business and would actually reduce economic activity in the state once deliveries of online purchases slowed.
Those are good arguments, but one question not being answered is what this federal legislation would mean for North Dakota’s ability to set its own sales tax levels. I’m a little suspicious of any federal law which binds our state tax code to the code in other states, and indeed that’s just what the law requires the state to do. And if North Dakota is deemed at some point in the future to no longer be in compliance with the law, it appears as though we’d lose all authority over our sales tax:
The proposed legislation…requires states to establish some minimum requirements, such as creating a “blended” single rate that is simple for online retailers to calculate, or providing the necessary software to allow calculation of tax owed based on a purchase within a taxing district.
Other state requirements include:
• Six months prior to the beginning of collection, states must publish a public notice about the legislation, detailing how to comply with the collection requirement and which businesses are exempt; and,
• State authority ends if a court determines the state is no longer in compliance and the decision is no longer subject to appeal.
Setting aside the debate over whether or not it’s fair for internet retailers to get away with not collecting the sales tax when brick-and-mortar retailers have to, any law which undermines North Dakota’s sovereignty on taxes out of be rejected out of hat.
I don’t think we need to sell our ability to set our own tax rates down the river to collect tax revenues the state doesn’t really need.