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States would gain from legislation in Congress ensuring Internet purchases are treated like traditional sales.
Friday, April 26, 2013
No, Sen. Mitch McConnell, the Marketplace Fairness Act is not about levying a new Internet sales tax, though opponents find it useful to characterize it that way.
It is about collecting taxes that are due to states and localities that now go uncollected on Internet purchases, giving a price advantage to online companies over brick-and-mortar businesses.
It will take an act of Congress to close this increasingly untenable tax loophole — the National Conference of State Legislatures estimates that, altogether, it costs states $23.3 billion in sales tax revenue in 2012.
This is money state budgets desperately need.
Now suddenly the Marketplace Fairness Act is on a fast track in the Senate, where Majority Leader Harry Reid pulled it off the shelf for consideration after the gun control bill, still alive but on life support, was removed — to return another day, perhaps in amended form.
The Internet tax bill, too, faces muscular opposition, but from a different cast of characters: eBay and Wall Street, which fears it would lead to state taxes on financial transactions, and from the usual deep-pocketed, anti-taxation advocacy groups like Americans for Prosperity.
But Marketplace Fairness has bipartisan support, cultivated by advocates that don’t divide neatly along Democratic/Republican or liberal/conservative lines. The National Retail Federation, for example, is lobbying for the bill. And if conservative governors like Virginia’s Bob McDonnell aren’t, they should be.
A billion dollars of recovered state sales tax revenues now lost in the ether were plugged into McDonnell’s landmark transportation package.
U.S. Senate opponents, including Finance Chairman Max Baucus, want to slow down the train. But Reid bypassed Baucus, whose state of Montana is one of four that has no sales taxes, and sent the bill straight to the floor, where it advanced by a lopsided margin in a procedural vote Monday.
If the opposition’s last-minute lobbying fails, the measure could pass the Senate by the end of this week. Then passage will be in the hands of lawmakers in the House, where it sits in the Judiciary Committee. Chairman Bob Goodlatte, of Virginia’s 6th District, has strong reservations about the legislation. But that might not matter in the end.
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