House Republicans warming up to Internet sales tax

Bob Goodlatte

After sitting on the Internet sales tax since in passed the Senate in May, House Republicans may be ready to move forward on the issue in the coming weeks, despite public opposition, as they will draft their own measure to enact what is unquestionably a tax increase:

House Judiciary Committee Chairman Bob Goodlatte (R-Va) is expected to release his own set of principles on the issue in the next week or two, according to sources who are closely watching the legislation.

The principles are a sign of fresh momentum for online sales tax legislation after Goodlatte and other top Republicans in the House — including Speaker John Boehner (R-Ohio) — voiced deep skepticism about the Senate-passed Marketplace Fairness Act (MFA).

Goodlatte could have chosen to bury the bill, but his decision to craft the principles shows he is serious about moving some version of the legislation forward.

The principles are expected to be broad policy statements with positions such as maintaining a simple system and not burdening businesses.

The Senate version of the Internet sales tax — the so-called “Marketplace Fairness Act” — would have impose an enormous regulatory burden on small businesses, making them tax collectors for more than 9,600 jurisdictions. The measure would also lead to higher prices for consumers.

Though any Internet sales tax proposal faces a high hurdle in the House, lobbyists and corporate interests looking to weed out online competitors will undoubtedly push hard to bring the measure to the floor for a vote. State governments, starving for revenue, also want the measure to pass.

Rep. Thomas Massie (R-KY), who has lead opposition to the Internet sales tax in the House, has explained that some of the behind the scene pressure being applied to members.

“I don’t think they want to come out and say this will never come to a vote because you have people donating to members of Congress with the implied and explicit understanding that at some point there’s a quid pro quo and they’re gonna get a vote on this, and they’re gonna get a new tax that’s gonna punish [their] competition,” Massie told United Liberty in late July.

House Republicans have to tread carefully here. The R Street Institute and National Taxpayers Union released a poll on Friday showing that 57% of likely voters oppose the Internet sales tax. Opposition soared to 70% when the merits of the proposal were explained. Similarly, a Gallup back in June found that 57% of American adults oppose taxing online sales. Both polls found strong opposition from young voters, moderates, and independents.

Conservative groups, which strongly opposed the Senate version of the plan, will likely apply pressure on House Republicans to defeat any Internet sales tax that the House may bring to the floor.

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