DeMint accuses Amazon of lobbying for online tax to cripple competitors

Sen. Jim DeMint (R-S.C.) on Wednesday blasted a bill that would allow states to tax online purchases and accused Amazon of lobbying for the bill to hurt its online competitors.

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 purchase on their tax forms, but few do. 

Amazon reportedly has plans to dramatically expand its number of physical distribution centers to allow for same-delivery. The physical centers would make Amazon subject to taxes in many states under current law anyway.

"Now that you're going to have to pay taxes in all of theses states where you have a physical presence, you want to come back and tax these other companies that don't," DeMint said at hearing of the Senate Commerce, Science and Transportation Committee.

Paul Misener, Amazon's vice president for global public policy, said the company supports the bill to establish a single national framework for collecting sales taxes, instead of a patchwork of state laws.

He argued that Amazon has long supported a national solution for taxing online purchases.

DeMint and Sen. Kelly Ayotte (R-N.H.) criticized the bill, which is called the Marketplace Fairness Act, warning it would burden businesses by forcing them to comply with varying tax systems. But most of the senators at Wednesday's hearing, including the Republicans, said the bill is necessary to level the playing field between online and offline businesses. 

“Small businesses in my home state of Illinois don’t want a handout from Washington," said Sen. Dick Durbin (D-Ill.), the author of the legislation. "They don’t want special treatment. All they want is a level playing field."

Sens. Mike Enzi (R-Wyo.) and Lamar Alexander (R-Tenn.), the lead Republican sponsors of the bill, argued it is about empowering states to make their decisions about what to tax.

Alexander predicted that many states will use the additional revenue from online purchases to lower overall tax rates.

Durbin, Enzi and Alexander do not serve on the Commerce Committee, but appeared as witnesses at the hearing.

Lawmakers argued that because people are already supposed to declare their online purchases, the bill does not impose new taxes.

"This debate is not about imposing new taxes," Committee Chairman Jay Rockefeller (D-W.Va.) said. "Instead, it’s just allowing states to collect taxes that are currently owed under existing law, but are being systematically avoided."

Sen. John Boozman (R-Ark.) also expressed support for the legislation, arguing that small retailers are unable to compete with websites that sell their products tax-free.

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