May 8, 2012

How ALEC Betrayed Conservative Republicans To Screw Over Mom And Pop Stores

How ALEC Betrayed Conservative Republicans To Screw Over Mom And Pop Stores
ALEC decided to ally itself with its corporate funder Amazon instead of standing with conservative Republicans.

The corporate front group American Legislative Exchange Council (ALEC) likes to claim that it’s about “free market” ideas. But if that were true, it wouldn’t be fighting against conservative lawmakers to manipulate tax policy to harm mom and pop stores in favor of giant corporations (who just happen to be their corporate donors).

Here’s how they do it.

Right now, massive online retailers like or Newegg get away without charging sales taxes in most states that they operate in.

That’s bad for mom and pop, brick and mortar stores, which are required by law to charge sales taxes. So, for example, a brick and mortar clothing store in Atlanta might have to charge a four percent sales tax by law, but Amazon will be able to draw customers by bragging that it can save people money by not charging these taxes.

Although consumers certainly enjoy the benefit of buying items from Amazon tax-free, over the long term consumers and workers will be harmed if Amazon and other giant on-line retailers put thousands of local merchants out of business and competition for consumers is undermined.

The obvious solution to this is to require every store — whether its a mom and pop operation or a massive online retailer — to have to charge the same amount in sales taxes. That would end this special “Amazon loophole.”

In the past year, state legislatures — many of them controlled by conservative Republicans in states like Texas, South Carolina, and Tennessee — pushed  to end this loophole and finally stop giving powerful online retailers this special treatment. “We just felt like it was really a matter of … South Carolina’s dignity,” said Don Weaver of the South Carolina Association of Taxpayers, a tea party-allied group that worked to close the loophole in that state.

But ALEC stood with the online retailers — like, which is a funder of the organization — against these conservative Republicans who sought to close this loophole. Amazon vigorously argued against tax fairness proposals by some ALEC legislators and successfully defeated any movement within the organization towards closing the loophole at ALEC’s 2011 meeting in New Orleans.

The corporate-funded Washington, D.C.-based lobby continues to argue against requiring the online retailers who fund it to charge the same taxes as brick and mortar, mom and pop stores. In doing so, it stands against the very same free market conservatives and small businesses it claims to be allied with.