The federal government and almost all these United States are broke, and so they're considering something we've all at least thought about from time to time: making money off the Internet. There's a fight brewing in Washington, D.C. over an attempt to collect sales tax from online purchases... yet again.
The idea is pretty simple - states haven't been able to collect sales tax on most Internet purchases thanks to a 1992 Supreme Court Decision holding that retailers can only charge tax in states where they have a physical presence (yes, all the folks in Kentucky have been getting screwed on their Amazon orders for many years now), so now they're turning to Congress for help getting around the ruling. The result is
H.R. 5660, the Main Street Fairness Act, introduced by Massachusetts Democrat William Delahunt, which would essentially do an end run around the status quo to give states the power to force Internet retailers to collect and remit sales from customers in those states, making it a whole lot easier to tax them.
Not surprisingly, everyone from Amazon to individual eBay powersellers seem to oppose the idea. The Computer and Communications Industry Association, which claims its members employ more than 600,000 workers and generate annual revenues in excess of $200 billion, had this to say:
CCIA has long opposed taxes on e-commerce, which would burden on-line vendors with the task of sorting through the policies of thousands of taxing authorities around the country, and forcing them to serve as revenue collection agencies for each of them. Small businesses from mom and pop operations to entrepreneurial companies may close if faced with such a legal and accounting nightmare.
This week, supporters of the bill tried to rally support on Capitol Hill, and they were met with a new resolution from New Hampshire Democrat Paul Hodes that seeks to stop any new Internet sales tax, not just the Delahunt bill, in its tracks. It calls the new accounting requirements that could be imposed on internet retailers "burdensome" and "unfair."
On the other side is the National Retail Federation, representing a number of brick-and-mortar retailers, who says the lack of an Internet sales tax is unfair
to them.
Touche.
And of course there is one other group that could be affected - actual taxpayers. Andrew Wylan of the National Taxpayers Union calls the attempts to tax internet sales a "money grab:"
Instead of seeking new avenues into taxpayers' wallets, legislators on the federal and state level should chart a path toward fiscal responsibility. Taxing Internet purchases beyond what's allowed already would be an unwise and unwarranted deviation from that path.
Lobbyists from both sides can be expected to work overtime on this issue, but our guess is the stalemate, and hence the status quo, will continue for quite a while. But with over $23 billion in potential revenue for state governments so cash-strapped they might as well add "hitchhiking" to their public transit master plans hanging in the balance, the issue isn't likely to completely go away anytime soon.
Photo by Don Hankins on Flickr. Used under Creative Commons License.
