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Online sales tax to be added to defense authorization bill

Photo of Betsi Fores
Betsi Fores
The Daily Caller News Foundation

This may be the last Christmas of online shopping without paying sales tax.

A proposed online sales tax has been offered as an amendment to the National Defense Authorization Act, much to the ire of opponents.

The Computer and Communications Industry Association, a group that opposes this move, says that an online sales tax will burden small businesses, “some of the most promising candidates for future economic growth.”

“This proposal, and other online sales tax collection proposals like it, would allow states to penalize the innovative e-commerce business model by targeting small online businesses as convenient sources (and collectors) of revenue,” said CCIA President and CEO Ed Black.

The Marketplace Fairness Act, and its House counterpart the Marketplace Equity Act, seek to clarify, and arguably overturn, a 1992 Supreme Court ruling that requires retailers to have a physical presence in a state in order to collect sales tax on goods.

“Severing the relationship between taxation and physical presence would be a fundamental transformation in how we consider taxes,” Black continued. “Such a significant step deserves more extensive consideration than attachment to the unrelated Defense Authorization bill.”

Still, a recent poll indicates that the majority of Americans support the idea, describing an online sales tax as “common sense”. They also feel that a tax for online purchases would encourage people to buy local and keep tax dollars in their community.

“Local retailers invest in their communities and play a significant role in the overall quality of life in the places we call home,” said Betsy Laird, senior vice president of global public policy for the  International Council of Shopping Centers.

Collecting the tax across state lines however poses as a challenge for small businesses that sell their goods in multiple states.

“It is not the job of small businesses to collect taxes to provide tax revenue relief for state and local governments outside their jurisdiction,” Black said, suggesting that an online tax would protect existing businesses at the expense of consumers and growth.

Some Republicans are on board, with Wyoming Sen. Mike Enzi as “the most overlooked tax loophole.”

“We are optimistic that once the Marketplace Fairness Act is brought for a vote, it will have enough support to pass,” said Illinois Democratic Sen. Richard Durbin’s spokeswoman, Christina Mulka.

Both Sens. Durbin and Enzi have offered the bill as an amendment to the National Defense Authorization Act.

“Sen. Durbin is focused on working with his colleagues to try to get a vote on the bill before the end of this year, whether as a stand-alone bill or part of a larger piece of legislation,” Mulka said. “They are keeping all options on the table at this point.”

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