Online sales tax to be attached to Senate budget

Lawmakers are again trying to attach an online sales tax to larger legislation they consider more likely to pass.

The Marketplace Fairness Act, which would allow states to levy sales taxes on goods purchased online, is being proposed as an amendment to the Senate budget for fiscal year 2014 by bill cosponsors Wyoming Republican Sen. Mike Enzi and Illinois Democratic Sen. Dick Durbin.

The National Retailer Federation sent a letter to Congress praising the amendment.

“As the retail industry evolves and digital commerce becomes a more prominent portion of total retail sales, it is critical that the tax laws not discriminate between similar businesses based on how their products are distributed,” the group argues.

“This legislation will level the playing field, while protecting small businesses from complicated laws in other states with a healthy small business exemption.”

Opponents of the bill, however, argue the tax proposal is anything but fair.

“The internet has allowed smaller businesses to compete everywhere, even if they lack the capital necessary to build a national network of wholesalers, distributors, and retailers like the Walmarts of the world,” RedState contributor Daniel Horowitz writes.

“[T]here is no good way of collecting e-commerce sales taxes across state lines without growing government, creating even worse market distortions, and hurting low-tax red states.”

In the last session of Congress, the bill was proposed as an amendment to the National Defense Authorization Act, but the move failed.

Though many lawmakers initially signed on to this year’s version of the Marketplace Fairness Act, including many Republicans, momentum for the bill has slowed.

There has been talk that the bill may be added to a larger comprehensive tax reform bill, though some feel that the measure should remain a separate 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,” Vermont Democratic Rep. Peter Welch, an Energy and Commerce committee member and co-sponsor of the Internet tax bill, said last Friday at the Politico Pro Technology Deep Dive.

The Senate budget proposal — the first unveiled in the upper chamber since 2009 — is expected to be debated through the week.

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