Hold onto your wallets. Watch those credit card receipts. Step away from your computer. The Republicans in the House are making a move on Internet sales tax legislation today despite potential opposition from the GOP base. Once again the GOP is fighting the GOP. The issue that divides the party once again is the Marketplace Fairness Act.
A federal bill that would allow states to compel online and catalog retailers to collect sales tax on all sales, regardless of where shoppers are located, has not been blocked after all.
Soon after reporting this, U.S. House Judiciary Chairman Bob Goodlatte (R-VA) said his committee will not pass the Marketplace Fairness Act. Nearly one month ago the U.S. Senate passed the bill by a 69-27 margin.
Now comes word via THE HILL:
Goodlatte could have chosen to bury the bill, but his decision to craft the principles (his recent proposal) shows he is serious about moving some version of the legislation forward.
Currently, if you buy something through the internet you pay no sales tax.
That's not exactly correct, but it's the theory. You see you DO pay sales tax if the item is shipped to you from somewhere within your own state. Many states have distribution and shipping facilities in their particular states so they are obligated to collect sales tax. And they're supposed to ship to you from your state if it's available. But don't believe it. I've bought things, been charged a sales tax and then saw on the tracking slip that the item was actually shipped from another state.
Under current law, states can only collect sales taxes from retailers that have a physical presence in their state. People who order items online from another state are supposed to declare the purchases on their tax forms, but few do.
Yet here's the strange rub. If I go to Sears in my nearby Nevada, and buy something and have it shipped to my residence in California, I pay no sales tax, even though there's a Sears in the Golden State. There is a shipping fee though, but depending on the item, it might be cheaper than the tax.
So now the federal government is trying to get involved. And we know what a mess that can be when the federal government tries to get involved in enforcing state law or any tax laws for that matter.
Here's the gist of it from the Heartland Organization:
Proponents of the Marketplace Fairness Act argue it is needed to restore a balance between online and traditional “bricks-and-mortar” retailers. However, the act requires online retailers to collect sales tax from each consumer, based on where the consumer is located. Traditional retailers collect tax based on where their stores are located, not on where their shoppers come from.
I'm all for saving brick and mortar stores. I personally like going out and shopping. And I buy more things when I'm out and see things I had no intention of buying before I left my house. That's good for the economy.
But I also like the convenience of internet shopping. So I think there will always be a need for both to coexist. So what this comes down to is taxes -- whether the states get their fair share.
This could soon become a hot-button issue.
Matthew Glans, senior policy analyst at The Heartland Institute, believes states should not be able to tax residents of other states because they have no political voice in the taxing state.
“The nexus standard that disallows state governments from forcing a tax on a company without the company having a physical presence in the state is an important taxpayer protection that has been repeatedly upheld in the U.S. Supreme Court,” he said. “This standard protects us from an abuse that Americans have fought against since our nation’s inception: taxation without representation.”
So keep your eyes open. While Republicans in the House are up to their tricks with self-destructive issues like Syria, the IRS, Immigration Reform, the Budget, and debt limits, they may try to squeeze in this bit of taxation. They're floating it. Let your congressperson know you're keeping your eye on it, no matter which way you feel.
Just remember I told you so when this gets attached to some highways or farm subsidy bill.