Congress Considers Taxing Internet Sales

Some Republicans are siding with Democrats around the proposition that online sales should be taxed. Now, Congress is adding a rider to the National Defense Authorization Act that would allow such a tax. The so-called Marketplace Fairness Act, which also has a House counterpart, the Marketplace Equity Act, will allow states to collect sales taxes on retailers who are located out of state.

This would be a fundamental expansion of states’ power to tax; it arguably violates the privileges and immunities clause, allowing states to set up tariffs against other states’ businesses. Wyoming Sen. Mike Enzi (R) is a fan of the legislation nonetheless, calling it “the most overlooked tax loophole.

If Congress wants to pass this tax bill, they ought to argue it on its own, not as an amendment to a Defense Authorization Act.