Internet Tax Bill Draws Strange Alliances

By:  Jack Kenny
04/30/2013
       
Internet Tax Bill Draws Strange Alliances

As the Senate moves toward likely passage of legislation to allow states to tax Internet sales, some unusual coalitions continue to push for and against the bill. 

As the Senate moves toward likely passage of legislation to allow states to tax Internet sales, some unusual coalitions continue to push for and against the bill. Amazon, the world's largest online retailer, is for it. So, too, is supply-side economics guru Art Laffer, famous for popularizing the belief that lowering taxes promotes both economic growth and higher revenue. Anti-tax crusader Grover Norquist of Americans for Tax Reform is fiercely opposed to the bill, while many of the congressional Republicans who signed ATR's pledge to vote against any new tax are solidly behind what supporters have dubbed the Marketplace Fairness Act.

"I oppose government policies that favor some businesses over another and that's what we're doing right now," said Senator Mike Enzi (R-Wy.). Internet sales are currently free of the sales taxes that 45 states, including Wyoming, impose on transactions that occur at retail establishments located within their borders. The bill's supporters say that puts the "brick-and-mortar" stores at a competitive disadvantage and deprives states of much-needed revenue. "Sales tax is the main source of revenue for cities, towns and counties and even the state," said Enzi. "It provides the money for roads, police, fire protection. If we don't collect that revenue, they'll have to find a new source."

Senators voted 63 to 30 to advance the bill on a procedural motion Thursday evening and a final vote is scheduled for May 6. The bill has broad support in the House as well, with some usually "anti-tax" conservatives on board. Rep. Steve Womack (R-Ark.), author of the House version of the bill, framed the issue as one of independence in comments to the New York Times.

"I have a lot of constituents saying to me, 'Grover Norquist did not elect you,'" said Womack. "Members that come to Washington and kowtow to special interests end up contributing to this very polarized government. These are tough decisions we have to make up here."

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