The Supreme Court ruled more than two decades ago that companies only have to collect from in-state customers, but also said that Congress could weigh in on the issue.
Supporters also say that customers are already supposed to pay taxes on online purchases when they file each year, and that the proposal could give billions in extra revenue to struggling state and local governments. The bill would also exempt small businesses with less than $1 million in out-of-state sales.
“Because these out-of-state companies are able to cut corners and play by a different set of rules, the cities and states lose out on funding for K-12 education, police and fire protection, access to affordable health care, and funding for roads and bridges,” Carney said Monday.
A full three-quarters of the Senate – 75 lawmakers, in all – backed the online sales tax proposal when it was voted on as an amendment to the chamber’s budget framework last month. That vote was nonbinding, but supporters said it showed their proposal was gaining momentum.
The bill is now bypassing the tax-writing Finance Committee on its way to the Senate floor. Several senior Finance members – including the panel’s chairman, Sen. Max BaucusMax BaucusGOP hasn’t reached out to centrist Dem senators Five reasons why Tillerson is likely to get through Business groups express support for Branstad nomination MORE (D-Mont.), and ranking Republican, Sen. Orrin HatchOrrin HatchOvernight Finance: US preps cases linking North Korea to Fed heist | GOP chair says Dodd-Frank a 2017 priority | Chamber pushes lawmakers on Trump's trade pick | Labor nominee faces Senate US Chamber urges quick vote on USTR nominee Lighthizer Live coverage: Day three of Supreme Court nominee hearing MORE (Utah) – have expressed opposition to the legislation.
Influential conservative groups like Grover Norquist’s Americans for Tax Reform and Heritage Action have also slammed the bill, saying it would be an unfair burden to force businesses to play tax collector for states where they don’t benefit from any services. The online retailer eBay is also an opponent.
Still, the issue does not break down cleanly along partisan lines. Several leading GOP governors, who have to balance their budgets each year, have endorsed the proposal, and top Republican sponsors in the Senate are also former state officials.
Top opponents – including Baucus and Sens. Ron WydenRon WydenOvernight Finance: Trump stock slump | GOP looks to tax bill for lifeline | Trump repeals 'blacklisting rule' | Dem wants ethics probe into Treasury secretary Senate Dem calls for ethics probe of Treasury secretary The Hill’s Whip List: Where Dems stand on Trump’s Supreme Court nominee MORE (D-Ore.) and Kelly AyotteKelly AyotteFEC commissioner to Trump: Prove voter fraud Live coverage: Day three of Supreme Court nominee hearing Lewandowski saw no evidence of voter fraud in New Hampshire MORE (R-N.H.) – come from states without a sales tax.