Senate Moves Forward on Internet Sales Tax

Power-hungry states are one step closer to being able to tax Internet purchases. Late yesterday afternoon, the United States Senate cleared a procedural hurdle that would allow state governments to tax online retailers, essentially making them tax collectors, even if they don’t have a presence in their borders.

The Senate overwhelmingly voted to limit debate on the so-called “Marketplace Fairness Act,” sponsored by Sen. Mike Enzi (R-WY), setting up a final vote on the measure in the chamber within the next few weeks. Many states want the extra revenue to spend on pet-projects and vote-buying schems. President Barack Obama has, unsurprisingly, also endorsed the online sales tax.

The Wall Street Journal notes that the Marketplace Fairness Act, which was never the subject of a committee hearing, “discriminates against Internet-based businesses by imposing burdens that it does not apply to brick-and-mortar companies.” The Wall Street Journal also points out that the driving force behind the bill is traditional brick-and-mortar retailers.

“So big business and big government are uniting to pursue their mutual interest in sticking it to the little guy,” notes the paper’s editorial board. “Any Internet seller with more than $1 million in annual sales would be forced to serve all of the nation’s tax collectors. It’s true that many small brick-and-mortar retailers in states with sales taxes support the Enzi bill.”

The Wall Street Journal explains that the online sales tax may not have the intended purpose because, instead of making their purchases in brick-and-mortar retailers, Americans may shift to foreign websites to buy desired items.

Another point worth making is the number of Senators who violated their tax pledge to their constituents to oppose any net-tax increase. Americans for Tax Reform, which last month announced its opposition to the Marketplace Fairness Act, keeps a list of signers to the Taxpayer Protection Pledge.

Here’s a look at who broke the commitment they made to their constituents to “oppose any and all efforts” to raise taxes:

  • Lamar Alexander (R-TN)
  • Roy Blunt (R-MO)
  • John Boozman (R-AR)
  • Richard Burr (R-NC)
  • Saxby Chambliss (R-GA)
  • Dan Coats (R-IN)
  • Bob Corker (R-TN)
  • Mike Crapo (R-ID)
  • Mike Enzi (R-WY)
  • Deb Fischer (R-NE)
  • Johnny Isakson (R-GA)
  • Mike Johanns (R-NE)
  • John McCain (R-AZ)
  • Jerry Moran (R-KS)
  • Rob Portman (R-OH)
  • James Risch (R-ID)
  • Jeff Sessions (R-AL)
  • Richard Shelby (R-AL)
  • John Thune (R-SD)
  • Roger Wicker (R-MS)

The Marketplace Fairness Act is likely to pass the Senate, but it’s unclear what the bill’s future is in the House of Representatives.


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