Internet Sales Tax Proposal Rears its Ugly Head in the Senate

July 24, 2014

By Christine Harbin Hanson

With only one week left before August recess, Congress has no shortage of serious issues to address— spending bills, the extension of expiring tax breaks,  highway funding legislation, and a host of other pressing policy priorities.  Instead of focusing on these higher-priority issues, however, the Senate is poised to consider one that’s much less pressing: an Internet sales tax. The misnomered ““Marketplace Fairness Act” or MFA would force out-of-state retailers to collect sales taxes for online purchases .

Reasons to oppose the MFA are myriad—internet sales taxes have serious logistical, constitutional, and economic problems. Its burden falls hard on small business, because they can less afford the software required to keep track of the thousands of ever-changing tax jurisdictions across the country. It also puts online retailers at a disadvantage relative to conventional bricks-and-mortar businesses.

In addition to our policy concerns, AFP also has concerns with procedure. Senators are attempting to attach the MFA as an amendment to the House-passed Internet Tax Freedom Act, legislation that permanently prohibits state and local governments from imposing Internet taxes, a moratorium that is set to expire on November 1. Legislation that’s as important and impactful as the internet sales tax should be considered as stand-alone legislation, not tacked onto another measure as an amendment.

Americans for Prosperity has consistently opposed Marketplace Fairness Act and similar measures to tax the internet, and we call on Congress to oppose it, too. We released a letter of opposition to the Marketplace Fairness Act when Senator Enzi introduced it earlier in 113th Congress. We issued a key vote alert when the Senate considered the measure on the floor last year, urging Senators to vote no on final passage.

The bill’s sponsor, Senator Enzi, claims that the Marketplace Fairness Act is a conservative solution, but this is far from the truth.  There is wide consensus among conservative organizations that the Internet sales tax should be opposed. Americans for Prosperity has been proud to be a part of a large coalition of organizations that have sent letters to lawmakers urging them to oppose the Marketplace Fairness Act and similar efforts to impose destructive Internet sales taxes (Here and here.)

If the past is any predictor, the Senate’s past actions on the Marketplace Fairness Act do not bode well for the future. The Senate voted on it earlier in 113th session as an amendment to the FY2014 Senate budget resolution, and it passed easily with a bipartisan 69-27 vote. “Only months after raising taxes on wages through Obama’s payroll tax hike and broader Fiscal Cliff deal, the Senate is now complicating the tax code instead of addressing wasteful government overspending as Americans want,” AFP president Tim Phillips said at the time.

Congress has more important things to do than expand Internet taxes.  Thankfully, it’s not too late to let them know. At Americans For Prosperity we make it easy for people to let their elected officials know what thy think on important issues such as this one. Tell Congress to stop the Internet sales tax.

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