Domestic Taxes

Governors group: Sales tax bill doesn’t violate tax pledge

The ATR and other leading conservative organizations – like Heritage Action and Americans for Prosperity – have slammed the online sales tax bill, which Senate Majority Leader Harry Reid (D-Nev.) has pledged to pass this week.

{mosads}In a recent letter to leading Senate Republicans, Norquist, the driving force behind the association’s pledge, said the online sales tax bill “can only be viewed as a tax increase.”

But the ATR has also yet to explicitly say that lawmakers would violate the pledge by voting for the bill, something that the group has done in the past. The online sales tax bill received 74 votes during a Wednesday procedural vote, the third time in the last month or so it has received strong support.

Under the measure, states would be allowed to collect sales tax revenue from businesses located anywhere in the country. Currently, because of a 1992 Supreme Court ruling, states can only require a retailer that is physically located within its borders to charge sales tax on purchases.

Those conservative groups have said that the legislation would be a burden to force small businesses to collect sales tax for states where they don’t even receive services.

But critics of the bill on the right have also noted that the legislation would cause a higher tax bill for many consumers who shop online. According to some estimates, state and local governments would gain roughly $23 billion in revenue a year under the Marketplace Fairness Act.

Proponents of the bill say that consumers already owe taxes on those purchases, but few taxpayers know about or pay those taxes. Supporters, including major retail groups and the Obama administration, also call the bill a way to remove an unfair advantage for online shopping outlets.

Tags Harry Reid

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