House GOP Takes Step Forward On Internet Sales Tax Legislation
By Mel Fabrikant Tuesday, September 17, 2013, 07:39 PM EDT
By Bernie Becker and Brendan Sasso - 09/16/13 06:00 AM ET
Republicans in the House are taking a step forward on Internet sales tax legislation despite potential opposition from the GOP base.
House Judiciary Chairman Bob Goodlatte (R-Va) is expected to release his own set of principles on the issue in the next week or two, according to sources who are closely watching the legislation.
The principles are a sign of fresh momentum for online sales tax legislation after Goodlatte and other top Republicans in the House — including Speaker John Boehner (R-Ohio) — voiced deep skepticism about the Senate-passed Marketplace Fairness Act.
Goodlatte could have chosen to bury the bill, but his decision to craft the principles shows he is serious about moving some version of the legislation forward.
The principles are expected to be broad policy statements with positions such as maintaining a simple system and not burdening businesses.
A Judiciary aide would only say that, “the House is currently examining all of the issues surrounding the collection of online sales taxes and working on alternatives to the bill passed by the Senate.”
Still, supporters of the online sales tax bill face a heavy lift in gaining traction for their issue, with looming fights over government funding and raising the debt limit expected to suck up the oxygen on Capitol Hill.
Goodlatte’s panel is also in the middle of the fight over immigration reform, which has itself been overshadowed by Syria and fiscal matters in recent weeks.
"Nobody on the Hill has a fuller plate than Chairman Goodlatte," said David French, the top lobbyist for the National Retail Federation and a supporter of online sales tax legislation.
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 bill that the Senate passed in a 69-27 vote in May would give states the power to tax the online sales of out-of-state businesses. The bill exempts businesses with less than $1 million in annual out-of-state sales.
Major retail chains are lobbying heavily for the legislation, arguing that the status quo gives an unfair advantage to Internet-only retailers. Amazon, which is expanding its network of physical distribution centers, also backs the bill.
Republican and Democratic state officials hope the bill will give them a new stream of revenue.
"It's not necessarily a question of if but when," French said. "Eventually the size of online retail is going to demand a congressional solution."
Rep. Steve Womack (R-Ark.), the main GOP author of the Marketplace Fairness Act in the House, acknowledged that the online sales tax issue would struggle to find a spot on the congressional calendar.
But the Arkansas Republican added to reporters on Thursday, “that doesn’t mean that other very meaningful issues facing our country should be set aside and just deferred."
The bill's opponents, led by anti-tax and small government groups, are ramping up their efforts to kill the legislation.
The National Taxpayers Union and the R Street Institute circulated a survey that found that 57 percent of likely voters oppose an online sales tax bill, with even a plurality of Democrats against the measure.
The two groups argue that those findings show that Republicans who oppose the online sales tax measure could have a powerful tool in general elections against Democrats, or even in primaries against fellow Republicans.
“I think these poll results show that the public has seen the MFA, listened to its best arguments, and aren’t buying any of them,” Pete Sepp of NTU told reporters on Friday. “I think they provide a very powerful indication of where the electorate is.”
Two of the most prominent GOP supporters of the online sales tax bill on Capitol Hill — Sens. Lamar Alexander (Tenn.) and Mike Enzi (Wyo.) — already have Republican challengers as the seek reelection in 2014. Liz Cheney, a daughter of former Vice President Dick Cheney, is trying to unseat Enzi.
Andrew Moylan of R Street added that he believed Goodlatte was “appropriately skeptical” of the Marketplace Fairness Act, and that he didn’t see much chance of the bill surviving in the House in its current form.
“I think they have the basic idea right,” said Moylan, who also said the groups’ new poll “reinforces that this is bad politics.”
The Marketplace Fairness Coalition — which is being helped out by a former Boehner spokesman — criticized the opposition survey as a push poll, and said their own polling showed that voters increasingly support the online sales tax bill the more they hear about it.
The coalition’s poll, released Friday, found that voters backed the idea that the government should not favor Internet retailers over brick-and-mortar shops, and that an online sales tax bill would help local businesses.
Womack told reporters on Thursday that he understands that voters can initially think that the measure is a new tax, as opposed to a measure to help collect taxes already owed. Once voters find that out, Womack says, their take is that “the last thing I want to see is tumbleweeds blowing down Main Street in my community.”
Still, Womack also said that, while he was willing to work with Goodlatte, there were certain provisions he would work hard to keep intact — like the $1 million exemption that eBay and other groups want to see boosted substantially.
“Then you start neutering the effects of the bill, essentially,” Womack said.