On October 21, 2001, the three-year Internet tax moratorium expired with little fanfare and no resolution. As a result, states are now free to impose access taxes and “new and discriminatory” taxes on the Internet, but they still cannot tax remote sales because the Constitution forbids it.
In the wake of the September 11 attacks, the House of Representatives passed a clean two-year extension of the Internet tax moratorium. Senators, John McCain (R-AZ) and Ron Wyden (D-OR), who previously supported some form of sales tax simplification have put aside their own personal concerns and co-sponsored, S. 1481, a bill nearly identical to the House passed two-year extension. Empower America President, J.T. Taylor said, “Empower America believes a clean two-year extension of the Internet tax moratorium would be the best compromise given current political realities.”
Senators, Byron Dorgan (D-ND) and Mike Enzi (R-WY), who were holding hostage any extension of the Internet tax moratorium unless the Congress allows for some type of national sales tax cartel, have agreed to debate competing plans on the Senate floor.
Taylor said, “Empower America sees the Dorgan-Enzi proposal as problematic on a number of fronts: It is contrary to sound economic policy, violates federalist principles, casually overturns Supreme Court precedent, and in its current form probably violates the Compact Clause as well. The Dorgan-Enzi proposal also drives a stake in the heart of beneficial interstate tax competition. Therefore, we would rather see Congress take no action to restore the moratorium than to use its extension as the Trojan Horse with which to smuggle a national sales tax cartel into law and create a host of problems even more burdensome to our national economy.”
Taylor also stated that, “we believe it is important for the Senate to pass a clean two-year extension of the Internet tax moratorium so the President can sign it as soon as possible. However, if the Senate adopts a version of the Dorgan-Enzi proposal, we urge the House to insist on the House passed compromise, even if it means no extension of the moratorium this year.”