Conservative groups split on online sales tax bill

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Betsi Fores The Daily Caller News Foundation
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Conservative groups are split over legislation that would allow states to collect sales taxes on purchases made on the Internet.

The American Conservative Union, American Majority, and Americans for Job Security are among the supportive groups arguing that the law will promote fair competition among all retailers.

“A robust free-market system requires a level playing field, where the government doesn’t get to pick winners and losers in the marketplace. Senator Enzi and Congressman Womack deserve praise for their efforts to empower states to make their own revenue policy choices and create a fair system of tax collection,” American Conservative Union chairman Al Cardenas said in a statement.

“Current law on Internet retail sales does not promote transparency; instead it countenances a hidden subsidy to a certain kind of business. To support this is not a conservative position and actually undermines one of conservatism’s cardinal principles: the rule of law,” Colin Hanna, president of Let Freedom Ring, a group that also supports the bill, wrote in an op-ed for The Hill.

On top of these groups, many Republican elected officials at both the federal and state level, notably governors seeking a new stream of revenue, have come out to support of the measure.

Some of these conservatives cite a 2001 column by William F. Buckley, Jr. titled “Get that Internet tax right,” in which he expressed his concern over the preferential treatment that could arise from leaving the Web tax-free.

“If the advantage of tax-free Internet commerce marginally closes out local industry, reforms are required,” Buckley wrote more than a decade ago. “The mattress maker in Connecticut is willing to compete with the company in Massachusetts, but does not like it if out-of-state businesses are, in practical terms, subsidized; that’s what the non-tax amounts to. Local concerns are complaining about traffic in mattresses and books and records and computer equipment which, ordered through the Internet, come in, so to speak, duty free.”

Others argue it would create a freer marketplace.

“There are a number of principles that unite conservatives,” Americans for Job Security President Stephen DeMaura told The Daily Caller News Foundation. “And one of them is that when the government does have to get involved in a situation, especially when it’s a tax, it should do so in a fair way, and doesn’t provide benefits to one group of people or one industry over another. And that’s essentially what the Marketplace Fairness Act would do — it gets rid of a subsidy or a benefit written into the tax code and makes it more of a free market.”

DeMaura likened the subsidy online retailers get to that of Solyndra.

“If this were any other industry, if this were Solyndra, or some other issue, conservatives would be uniformly against providing a subsidy or benefit over one industry over the other,” DeMaura said.

Some retail groups have also come out in favor of the bill.

“Congress has an opportunity to enhance states’ rights over sales and use tax collection authority and in the process level the playing field for all merchants,” the Marketplace Fairness Coalition, a group of over a hundred retailers, wrote in a statement that accompanied a letter to Congress signed by its members urging Wyoming Republican Sen. Mike Enzi to propose an amendment to the Senate budget that would at least affirm the principles behind the online sales tax

While many conservative groups have broken ranks to come out and favor of the bill, many are still ardently opposed to it. Those groups include Americans for Tax Reform, National Taxpayers Union, Americans for Prosperity and FreedomWorks, among others.

Former South Carolina Republican Sen. Jim DeMint, now president-elect of the Heritage Foundation, has described the online sales tax as “no taxation without representation.”

“In seeking to address the failures of the ‘use tax’ systems employed by states, the Marketplace Fairness Act ends up giving a federal blessing to a massive expansion in state tax collection authority, the dismantling of a vital taxpayer protection upon which virtually all tax systems are based,” Andrew Moylan of R Street writes.

Opponents of the bill feel that they are David fighting Goliath.

“Almost all of the other conservative groups…have all come out against it on various grounds on the growth of government, or on the tax burden,” Phil Bond, the executive director of WE R HERE, a group of thousands of small businesses around the country who oppose the bill, told The Daily Caller News Foundation. “On the other side, you have a very organized lobby, and you have a number of governors and state treasures, the pro revenue crowd on the other side. So we shall see.”

While supporters of the bill are confident, Bond is pleased it has yet to see the light of the Senate floor.

“It has never really seen the light of day, the actual Senate bill, and it won’t this week either,” Bond said.

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