Lawmakers advised Friday that an online sales tax would be more likely to pass if it is not folded into a larger tax reform bill.
“If we meld this into quote tax reform, there’s a lot of apprehension about whether it’s going to be a tax grab,” said Vermont Democratic Rep. Peter Welch, an Energy and Commerce committee member and co-sponsor of the Internet tax bill, at the Politico Pro Technology Deep Dive.
A similar opinion was voiced by Illinois Republican Rep. Aaron Schock, a House Ways and Means Committee member.
“I do not believe at the end of the day it is going to be a part of a tax reform bill because it’s not a part of the tax code,” he said.
The Marketplace Fairness Act, a bill that would allow states to collect sales tax for online purchases, was reintroduced into Congress last month with bipartisan support. Twenty senators and 37 representatives immediately signed onto the bill.
This past month, however, the bill has stalled, causing supporters to look for new ways to push it forward.
“The political reality is you may have to stick it in comprehensive reform,” Arkansas Republican Rep. Steve Womack, a co-sponsor, said of the bill. “We need to fix the problem. It’s a loophole that’s getting bigger and bigger.”
At the end of the last session of Congress, the bill was offered as an amendment to the National Defense Authorization Act, though the efforts were unsuccessful.
Supporters of the bill include brick-and-mortar retailers who maintain that online retailers have an unfair advantage by not collecting sales tax and cash-strapped states looking for new sources of revenue.
Opponents contend the tax collection burden placed on the small online retailers would be onerous.
The bill has split Republicans. While some consider the bill closing a tax loophole, others consider it a tax increase — one that would violate the Taxpayer Protection Pledge sponsored by anti-tax activist Grover Norquist.
“We have to stop thinking of Grover Norquist as the tax pope,” Information Technology and Innovation Foundation president Robert Atkinson said.
Some Republicans have said they might support some form of an online sales tax, but do not support the bill as it is currently written.
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