The United States Senate overwhelmingly supported a tax on Internet sales today, voting 70-24 in favor of the Marketplace Fairness Act. The outcome was expected after a similar non-biding show of approval passed the Senate with roughly the same number of votes, despite extraordinary opposition from eBay and other major Internet organizations.
As we’ve written about before, supporters argue that tax-free Internet retailers have an unfair advantage over their physical counterparts and it robs states of billions in revenue. Opponents counter that the current bill would create an unwieldy tax code labyrinth, which would be forced on startups and Internet retailers before software technology could manage the new tax.
The bill now heads to the House of Representatives for possible revision. TechCrunch’s sources on Capitol Hill say that broad support in the Senate makes it difficult for House members to oppose the legislation, but it may be modified to increase the threshold for businesses who have to collect online taxes, from $1M in revenue to $10M
This is one of those laws that affects almost everyone directly. I’m kinda surprised there’s not more of an uproar.
… the pain smaller businesses stand to suffer will come in the form of lost time and attorneys’ fees from having to deal with the bureaucracies of the 46 states that collect sales tax – pain that the biggest retailers have the human and financial resources to withstand.
“The complexity is not first of all in the calculating of the tax,” Bieron says. “The reason this is the challenge to small businesses in particular is the number of state tax authorities who can come after you with their tax laws. … That’s a dramatic and negative change. And there’s no software for that.”
On June 21, 2018, the United States Supreme Court fundamentally changed the rules for collection of sales tax by Internet-based retailers. In its decision in South Dakota v. Wayfair Inc., the Court effectively stated that individual states can require online sellers to collect state sales tax on their sales. This ruling overturns the Court’s 1992 decision in Quill Corporation v. North Dakota. The Quill case prohibited states from requiring a business to collect sales tax unless the business had a physical presence in the state.
I’m against tax increases unless we can each individually say where our money will go. Now that would be a great democracy experiment.