Those of you with an overflowing Amazon wish list may want to consider moving some of those items to the checkout cart sooner rather than later, because if Democratic Rep. Bill Delahunt has anything to say about it, the care-free, tax-free days of internet spending are about to come to an end.
While many consumers already “enjoy” extra taxes tacked onto purchases made over the internet (like California!), Delahunt wants to make sure that those extra taxes go out to all Americans who avoid state sales tax by shopping online.
When the tax man comes around
As it is, many Americans who shop online from out-of-state vendors are able to bypass state sales tax whenever they buy something online. For example, if I buy a new monitor from New York, or some sweet rims from Texas, I can buy them online and completely ignore that state’s sales tax and save a couple of bucks.
And that right there is what’s got many pro-tax government officials, like Delahunt, in a fit. They’re arguing that the loss of state tax revenue, particularly from states that depend more on sales taxes than others, means less money for the state’s schools and police forces. In light of this, they’re pushing to introduce Delahunt’s bill, the Main Street Fairness Act, for online retailers to collect the same amount of taxes that real-world retailers do as well.
This isn’t exactly a new debate – many state governments have been pushing this agenda ever since the internet really took off a decade ago. But with many states finding themselves closer and closer to the red, looking for revenue anywhere they can, pro-tax officials are more confident the bill will pass. The National Conference of State Legislatures applauds the bill, saying it could allow states to collect as much as $23 billion dollars in new taxes.
They’re not the only ones in favor of the new bill. The Retail Industry Leaders Association, which includes such giants as Wal-Mart, Home Depot, Costco, and IKEA, showed their support of the bill as well.
And in this corner…
This may come as a bit of a surprise, but not everyone’s in favor of the new tax bill. Among many lower tax advocates and retailers, Amazon.com and eBay stand out. A statement from Tod Cohen, eBay's vice president for government relations, read: "At a time when unemployment rates are high and small businesses across the country are closing shop, we are confident that Congress will protect small Internet retailers and the consumers they serve from another Internet tax scheme."
While a final version of the bill hasn’t been made public just yet, many are expecting it’ll look similar to past versions that were introduced. Many feel past bills on the subject were too complex for their own good, which prompted pro-tax officials to offer a proposal called the Streamlined Sales Tax Agreement, which they hope Congress will adopt. Drafted in 2002 by state tax officials, the Agreement hopes to iron out some of the more convoluted parts of state tax laws.
Now, 24 states have jumped onboard, promising to simplify and streamline their tax codes. If more follow, proponents of the new tax bill say they have a better chance of passing Delahunt’s bill.
What say you?
We want to hear your take on this. Does this sound like the right way to go for states in need of serious debt relief? Or are they simply barking up the wrong tree? Let us know what you think!
