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Despite their lip service to cutting taxes, a handful of Republican senators are pushing for a sales tax on Internet purchases. Senator Mike Enzi of Wyoming has introduced the so-called Marketplace Fairness Act that would create a new national online tax that would take away more of our money and freedom. The Republican cosponsors of S. 1832 are Sens. Lamar Alexander, Roy Blunt, John Boozman, and Bob Corker. These Internet sales tax schemes are nothing new but greedy politicians seem more determined than ever to pass it this year.
As it currently stands, you are not required to pay any state taxes if you are purchasing a product on the Internet from a store or a person in another state. States can only impose taxes on businesses within their borders. But that could all change if a handful of Democratic and Republican Senators get their way.
Senator Lamar Alexander of Tennessee told the Wall Street Journal that an online sales tax “is going to happen – if not this year, then definitely by next year.” (P.S. he’s up for reelection in 2014.)
Thankfully, there are still principled conservatives in the Senate who are standing firmly against a national online sales tax. Senator Jim DeMint of South Carolina wrote an outstanding Wall Street Journal op-ed citing his opposition to the Marketplace Fairness Act. Here’s a clip:
At its core, this is a nationally mandated Internet sales tax on businesses. Once a single state demands these sales tax collections under the new law, businesses in every other state would be forced to comply with that state's tax laws. Dozens of states are eagerly waiting to raise those taxes, as soon as Washington opens the floodgates.
The burden on Internet entrepreneurs could be staggering. There are already nearly 10,000 state, local and municipal tax jurisdictions to navigate nationwide.
Just complying with a single state's tax laws costs small businesses disproportionately more than larger firms that can afford accounting and technology teams to help them work through these arcane laws. A 2006 PricewaterhouseCoopers study found that tax-compliance costs for small businesses (those having $1 million to $10 million in annual sales) are nearly 2.5 times greater than those of larger firms. For businesses under $1 million in sales, those costs explode to 16 cents on every dollar of revenue.
(The whole op-ed is worth reading here.)
Congress should be focused on cutting spending—not dreaming up new ways to take away even more money from families trying to make ends meet in this troubled economy. Sign the FreedomWorks’ petition to stop the online sales tax today.