by Mitch Kokai
Senior Political Analyst, John Locke Foundation
This year in the Senate, Democrat Dick Durbin of Illinois and Republicans Mike Enzi of Wyoming and Lamar Alexander of Tennessee introduced the Marketplace Fairness Act of 2013, the latest iteration of the legislation. To make tax collection less onerous, the bill would require the states to simplify their codes and provide free tax-computing software to the Internet retailers. This would give Main Street merchants a fighting chance, the supporters claim. They tell tales of shoppers who try on clothing at the local dress shop and then purchase the items on the Internet to save on taxes.
In the Senate last Friday night, supporters successfully attached the bill as an amendment to a budget plan introduced by Finance Committee Chairman Patty Murray of Washington by a vote of 75-24. The amendment was a publicity stunt of sorts because Murray’s partisan budget will never make it through the Republican-dominated House. The GOP calls the Murray budget a giant tax-and-spend plan that would end up eliminating popular middle-class deductions. But the stunt exceeded the wildest expectations of its supporters. The legislation is more alive this year than ever because of the Senate vote.
ALTHOUGH THE BIPARTISAN group supporting the Internet tax-collection bill has been growing each year, it just now reached critical mass in the Senate, where it has 27 sponsors from both parties. There are 48 co-sponsors of the legislation in the House, where the bill hasn’t yet come up for a vote. Prospects for the measure are positive. Passage would take away a major advantage of the e-sellers.
There is, of course, one easy way to avoid the prospect of an additional tax on Internet-based sales: Scrap the sales tax. That’s an idea the John Locke Foundation has proposed in a reform proposal for North Carolina that relies on the consumed-income USA Tax.