Senate Passes Bill To Give States Ability To Collect Online Sales Tax (updated) [View all]

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Senate Passes Bill To Give States Ability To Collect Online Sales Tax

By Travis Waldron

The United States Senate voted Monday evening to pass the Marketplace Fairness Act, bipartisan legislation that would close what is known as the “Amazon loophole” by giving states the authority to collect sales taxes on online purchases even when internet retailers aren’t based within their borders. That loophole gives online sellers an advantage over brick-and-mortar retailers that have to collect sales taxes on most purchases.

The legislation passed 69-27.

The new rules would apply to all retailers with sales exceeding $1 million a year should it pass the House of Representatives, where it is expected to face opposition. Amazon, the largest online retailer, now supports it, but eBay and other online outlets are opposed. eBay sent 40 million emails to its users in April protesting the legislation.

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Despite those concerns, the closure of the loophole will have big benefits for states and taxpayers. States have lost billions of dollars to the loophole at a time when tight budgets have forced them to cut back on education and other programs. Low-income taxpayers, meanwhile, will benefit because closing the loophole will make state sales taxes slightly less regressive. However, raising the exemption, as eBay wants to do, would significantly reduce those benefits, which have been sought by governors, including Republicans, across the country in recent years.

http://thinkprogress.org/economy/2013/05/07/1971541/senate-passes-online-sales-tax/

Roll call: http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=113&session=1&vote=00113

Updated to add:

The politics of online sales taxes

By Steve Benen

When there are 69 votes in the Senate for anything, it's an uncommon day in the chamber, but when there are 69 Senate votes for a tax bill, something unusual is going on...For the most part, Democrats supported the bill and Republicans didn't, but take a look at the roll call and note the non-traditional pairings. In this bill, several conservative Republicans from red states like Mississippi, Nebraska, and Alabama voted for online sales taxes, while more progressive Democrats from blue states like Oregon and New Hampshire voted against it...when Sen. Mike Enzi (R-Wyo.) votes for a tax increase and Sen. Ron Wyden (D-Ore.) votes against it, you know the "Marketplace Fairness Act" isn't the usual bill.

So, what's the story? The law currently only requires online outlets to charge a sales tax if the business has a brick-and-mortar building in the state. This system, in turn, creates a disjointed series of advantages and disadvantages -- it hurts local retailers who don't want to lose customers to Internet retailers, but it also hurts online outlets like Best Buy and Target which are trying to compete in both markets, and don't want to lose online customers to websites that won't have to charge sales taxes.

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What's more, Democratic and Republican policymakers at the state level, where sales-tax revenue is critically important, have also been pushing Congress on the issue...given all of this and the lopsided Senate vote, Internet sales taxes are on the way, right? Well, not just yet.

There's still the Republican-led House to consider...This is not to say the bill is DOA in the House -- it has 65 co-sponsors, almost half of whom are Republican -- but it may require House Republican leaders to once again consider circumventing the so-called Hastert Rule.

http://maddowblog.msnbc.com/_news/2013/05/07/18103701-the-politics-of-online-sales-taxes

Members of Congress have the power to change the economic equation, but they're refusing to act.
http://www.democraticunderground.com/10022796943