Senators warn against online tax vote

Senators clashed on Thursday over a budget resolution amendment to empower states to tax online purchases.  

Sens. Dick DurbinDick DurbinDems rip Trump administration for revoking Obama's transgender directive A guide to the committees: Senate McConnell: I’m very sympathetic to 'Dreamers' MORE (D-Ill.), Mike EnziMike EnziA guide to the committees: Senate GOP senators unveil bill to give Congress control of consumer bureau budget Grizzlies, guns, and games of gotcha: How the left whiffed on Betsy DeVos MORE (R-Wyo.) and Lamar AlexanderLamar AlexanderA guide to the committees: Senate Overnight Healthcare: Trump officials weigh fate of birth control mandate | House, DOJ seek delay in ObamaCare lawsuit House, Justice Department ask for delay in ObamaCare lawsuit MORE (R-Tenn.) argued in speeches on the Senate floor that the amendment, which is based on their Marketplace Fairness Act, would close an unfair loophole that benefits online retailers over local brick-and-mortar stores.

But Sen. Max BaucusMax BaucusFive reasons why Tillerson is likely to get through Business groups express support for Branstad nomination The mysterious sealed opioid report fuels speculation MORE (D-Mont.), the chairman of the Finance Committee, called the proposal "revolutionary" and said lawmakers should take more time to consider potential consequences before rushing to a vote. 

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"I think this amendment is not yet ready. It's premature," he said.

Sen. Kelly AyotteKelly AyotteLewandowski saw no evidence of voter fraud in New Hampshire NH governor 'not aware’ of major voter fraud Former NH AG: 'Allegations of voter fraud in NH are baseless' MORE (R-N.H.) warned that it would hurt businesses and destroy jobs. 

"There's absolutely nothing conservative about this," she said.

The Senate budget will not become law, but the vote is an important test of support for online sales tax legislation. If the measure garners 60 or more votes as an amendment, supporters are likely to push to bring the legislation directly to the floor, skipping the committee process.

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.

The Marketplace Fairness Act would empower states to tax online purchases but would exempt small businesses that earn less than $1 million annually from out-of-state sales.

Durbin argued that the bill would benefit small businesses, which are unable to compete with untaxed Internet giants. He argued that Internet retailers benefit from public services such as roads and electricity and should have to pay their fair share of taxes. 

Alexander argued the bill is an issue of "states rights" and that states should be empowered to tax online goods. He warned that without the legislation, many states will only increase other taxes to make up for lost revenue.

Sens. Roy BluntRoy BluntA guide to the committees: Senate Judiciary Committee wants briefing, documents on Flynn resignation Intel Dem: House GOP now open to investigating Flynn MORE (R-Mo.) and Al FrankenAl FrankenKentucky Dem lawmaker questions Trump's mental health Americans should get used to pop culture blending with politics A guide to the committees: Senate MORE (D-Minn.) also spoke in support of the proposal.

But Baucus insisted that the legislation go through his Finance Committee before being brought to the floor. He said he would be willing to consider the proposal as part of broader tax reform, but urged the supporters to abandon their attempts to bring the proposal to a full Senate vote.

"There are going to be a ton of amendments that are not going to be appreciated by the supporters of this bill, and they are going to dramatically weaken what they think they might have," he threatened.

Montana and New Hampshire, the home states of Baucus and Ayotte, respectively, are two of the five states that have no sales tax. 

Major retailers, including Amazon, support the online sales tax legislation, but it is opposed by eBay and anti-tax groups.