Internet Sales Tax Bill Passes Senate, Moves to U.S. House


On March 11, 2013, a coalition of 15 taxpayer advocate groups wrote to Congress explaining the reasons why the proposal to tax internet commerce would be a disastrous idea:


[The Internet Sales Tax Bill] would countenance an enormous expansion in state tax collection authority by wiping away the “physical presence standard,” a baseline protection that shields taxpayers from harassment by out-of-state collectors. Current law dictates that a state can only require a business to collect its sales tax if it is physically present within its boundaries. Far from a “loophole” intended to advantage the Internet, it is the result of a Supreme Court decision grounded in a bedrock foundational principle of tax policy: states must not be allowed to extend their taxation and regulatory authorities beyond their borders. Dismantling this protection for remote retail sales would create a very slippery slope for states to attempt collection of business or even income taxes from out-of-state entities.


A second coalition letter in opposition, signed by over 50 organizations and key activists, was recently published by FreedomWorks:


[R]etailers would be subject to laws imposed by states with which they have no direct connection, and in whose political system they have no voice.  It is regulation without representation, allowing politicians to raise revenue, without fear of a public backlash.   The result would be added costs for retailers and American consumers, directly through the sales taxes imposed, but also through the added burden of collecting the taxes for the 9,600 separate taxing jurisdictions in the U.S., each with its own unique definitions, holidays, and rates. It is also unfair to require online businesses to collect and remit sales taxes from all their customers based on their residence but not to require brick-and-mortar businesses to do the same.  No such requirement should exist for any type of business.


Further elaboration and opposition has been offered by a broad coalition of groups and media outlets working together and separately, including CNET, Reason, The Blaze, the Cato Institute, FreedomWorks, Tea Party Patriots and the Heritage Foundation, among many others.


Texas’ own Sen. Ted Cruz recently delivered a forceful and persuasive case against the internet sales tax bill:



The Internet is a thriving ecosystem of entrepreneurial freedom that should be protected and nourished. It has allowed new businesses to compete in the national marketplace in ways that would have been impossible 15 years ago, and it empowers consumer choice. But tax-hungry politicians view the Internet as yet another source of revenue to bail out their big-spending governments.


The misleadingly titled Marketplace Fairness Act is a job-killing tax hike, plain and simple. It is, in effect, a national Internet sales tax, which would hammer the little guy and benefit giant corporations.


Senators who vote for it are voting to impose audits, compliance costs, lost wages, and inefficiency on small businesses in every state. And they are potentially crippling an engine of new job creation at a time of economic struggle. This bill will not create jobs; it will not create new opportunities; and it will not create the economic growth our country needs and our people deserve.


Unfortunately, the U.S. Senate has voted in favor of the internet tax bill, which will now move to the U.S. House for consideration.


If you agree that government hands should be kept off of internet commerce, this would be a very good time to call your Congressman and let him/her know.



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