Michigan governor joins online sales tax chorus

In his letter, Snyder also says that Michigan’s treasury department projects that the state will lose some $872 million this year and next from revenue not collected on Internet purchases.

Supporters of a federal online sales tax bill have long argued their approach will simply give states the power to collect taxes to which they are already entitled.

“As we continue to work to improve the quality and efficiency of services throughout the state, it is crucial that the state has the tools to fairly collect the revenue that it is owed,” the governor wrote to Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.).

Snyder, who dubbed himself “one tough nerd” in his 2010 campaign, now joins a list of roughly a dozen GOP governors — in places like Alabama, Idaho, Indiana, Maine, Nevada and Tennessee — that want to give states more leeway to collect online sales tax revenue.

That roster includes Tea Party favorites like Gov. Paul LePage (Maine), and Gov. Mitch Daniels (R-Ind.) and former Gov. Haley Barbour (R-Miss.) are also on board with the idea.  

Industry groups that back the online sales tax bills, such as the National Retail Federation and the Retail Industry Leaders Association, have said that the governors’ support is giving momentum to their push for a federal solution. 

Legislation in both the House and the Senate would allow states to collect sales tax revenue on online purchases made from retailers located elsewhere. Because of a 20-year-old Supreme Court decision, states currently can only levy sales tax on Internet purchases from companies that have physical operations in the state. 

Supporters also say the bills support states rights, an issue dear to many conservatives, by letting the states themselves decide whether they want to bring in the tax revenue from Internet purchases. 

But at the same time, prominent figures on the right say that states should be more concerned with lowering taxes than finding new revenue streams, and the business community is also not totally on the same page on the issue.

Given the other fiscal and tax issues that Congress has to deal with in the coming months, like the Bush tax cuts and automatic spending cuts, backers of the bill are also worried that there won’t be enough time for their measure this year. 

An aide to Snyder said the Michigan governor’s support for the online sales tax proposal dovetailed with his previous work to make the state’s tax code simpler, fairer and more efficient. 

Snyder already cut taxes for businesses in Michigan, which liberals there said merely shifted the tax burden onto the lower and middle class.