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August 02, 2010

Democrats Propose Huge Internet Tax

By David Sims, TMCnet Contributing Editor


They're at it again, trying to tax the Internet. To quote Pete Seeger, when will they ever learn?

Online shoppers in most states avoid paying sales tax on items purchased over the Internet. You might have noticed that it's one of the few parts of the economy doing well about now. Democrats would like to change all that.


On July 1, given the typically Orwellian name such legislation gets, the Main Street Fairness Act, sponsored  by Democrat Rep. William Delahunt from Massachusetts, wants to impose a state sales tax on consumers who shop online.

A bipartisan delegation led by Rep. Paul W. Hodes, (D-N.H.), would maintain the business-friendly status quo. It contains language that says “Congress should not impose any new burdensome or unfair tax collecting requirements on small online businesses, which would ultimately hurt the economy and consumers.”

“If you are concerned about rising taxes, this is a vehicle to avoid that,” Delahunt said in proposing the tax. That's right, he proposes a tax to avoid more taxes. Don't ask us, we stopped taking seriously anything politicians say years ago.

However, "the US Supreme Court upheld in its 1992 ruling on Quill Corp v. North Dakota the argument that it’s too onerous and costly for businesses to calculate how much tax should be collected because of the complexity of tax rules from state to state," according to industry observer Michelle Lodge.

Lodge says within Delahunt’s bill is a provision that permits states to require sales tax payment as long as the states have accepted a set of rules that claim to simplify collection through the Streamlined Sales and Use Tax Agreement.

Happily the bill comes up at an acutely poor time: It's an election year and the nation has 15 million unemployed people. And consumers love the no-sales-tax policy. Foolish be the politician who would mess with that.


David Sims is a contributing editor for TMCnet. To read more of David’s articles, please visit his columnist page. He also blogs for TMCnet here.

Edited by Marisa Torrieri


 
 
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