State GOP Lawmakers Push Internet Sales Tax Bill

A group of about 25 Republican state legislators from several generally conservative states went to Capitol Hill Thursday to press House members to pass Internet sales tax legislation.

“If we don’t get this done this session, 50 states are being held hostage,” said Alabama state Rep. Gregory Wren, explaining to reporters how he planned to put the question to House members in a later meeting. “We don’t understand why you guys can’t do it.”

The legislation, known as the “Marketplace Fairness Act,” would allow states to require online sellers to collect state sales taxes. It passed the Senate on a bipartisan 69-27 vote in May and is supported by President Barack Obama.

Online retailers had been the biggest opponents of the legislation, but that has begun to change with the decision of Amazon and Walmart to support the bill. The big companies say it’s unfair to require businesses to collect sales taxes only in states where they have a physical presence, which is the case under current federal law.

States have long-pressed for the right to impose sales tax on Internet transactions, saying it’s a matter of fairness. Not taxing online sales is estimated to cost states billion annually in lost revenue.

The members of the state delegation pointed out that sales taxes have plateaued as a source of income for the states, as many buyers have turned from brick and mortar stores to Internet outlets. The lawmakers also said it’s very difficult to raise sales tax rates to compensate.

Getting federal Republican lawmakers to embrace the Internet sales tax has been difficult since some consider it raising taxes. State officials argue it’s not a new tax, but just collecting taxes that should be owed anyway.

“This is good policy,” said Indiana state Sen. Luke Kenley. “The (U.S.) Senate vote showed a level of understanding that this is not a tax increase.”

House Judiciary Committee Chairman Bob Goodlatte, a Virginia Republican, blunted some of the anti-tax fever by saying in September that he would consider the measure as long as it was not an insurmountable burden for small business. But there’s been no concrete progress in the House.

With the end of the congressional session just around the corner in December, the list of possible accomplishments by then is short, making it even harder for the state officials pushing the Internet sales tax.

“It’s not about whether Congress has the time,” Wren said. “It’s about whether Congress has the force to do this.”