Sen. Harry Reid (D-NV), Walmart, Amazon, and some Republicans are fighting to ram through an Internet sales tax bill to raise revenues and crush smaller e-commerce competitors.
The “Marketplace Fairness Act” (S. 743), a retread of a bill introduced in February by Rep. Mike Enzi (R-WY), was introduced last Tuesday and may be rushed to a vote as early as April 22nd using a Senate rule that side-steps committee debate and goes straight to a vote.
If passed, the law would require online merchants with over $1 million in annual sales to collect sales taxes for 9,600 state and local taxing authorities, a move that could dramatically increase overhead costs for smaller e-commerce sellers.
As the Wall Street Journal notes, the Internet tax bill would benefit big online sellers like Amazon and Walmart who can more easily absorb the added costs:
The drivers of this rush to tax are Wal-Mart and other big retailers that can more easily absorb the costs of collection than can smaller competitors. Also supporting the bill is Internet giant Amazon, which coincidentally now sells its own tax compliance service to other merchants. Adding to the lobbying muscle are state and local governments. The politicians believe they’ll collect tens of billions of dollars in taxes that are already owed by shoppers on remote sales but rarely paid.
Supporters of the Internet tax say the move would help brick-and-mortar businesses compete with online merchants, and some conservatives believe raising online revenues will help thwart efforts to raise state income taxes.
But as the Journal points out, no law could “force all the world’s Internet businesses to collect local U.S. taxes. So instead of shifting sales from online to bricks-and-mortar, he might succeed in shifting them from U.S. online merchants to foreign ones.” Moreover, “new revenues will merely fund larger government.”