A bill called the Marketplace Fairness Act has been advanced in the Senate by a vote of 74-20 after being strongly endorsed by Barack Obama. The bill would let states tax online purchases so internet businesses would be forced to make consumers pay state taxes on their purchases. Amendments will now be offered, and the bill is expected to be voted on later this week. 

Two giant tech companies are facing off: Amazon is in favor of it, while eBay is against it. Amazon has been reportedly building distribution centers in many states so they can accommodate the bill.  Other supporters such as the National Retail Federation, which represents chains such as Best Buy, Macy’s and J.C. Penney, and the Retail Industry Leaders Association (RILA), which includes Target, said they would watch to see which way lawmakers voted. Other endorsers include governors Chris Christie of New Jersey, Rick Snyder of Michigan and Bob McDonnell of Virginia.

The opposition, in addition to eBay, includes Wall Street groups such as The Securities Industry and Financial Markets Association and the Financial Services Roundtable. Scott Talbott, the senior vice president of public policy for the Roundtable, said:

It’s important for Congress to explore all the possible outcomes and costs of the proposal, especially the impact on consumers.  A transaction tax on financial services products will hurt retail investors, retired Americans, and small businesses, effectively making it more expensive for them to invest and plan for the long-term. Without hearings, these implications and others will not be properly addressed.

The White House disagreed. White House press secretary Jay Carney said, “We have heard overwhelmingly from governors, mayors and the business community on the need for federal legislation to level the playing field for our businesses and address sales tax fairness.”

The GOP-controlled House may scuttle the bill; Heritage Action, Americans for Prosperity and FreedomWorks are threatening that they, too, will watch congressmen to see which way they vote.

The Marketplace Fairness Act would exempt small businesses that earn less than $1 million each year. eBay is urging Congress to raise that exemption to $410 million.

Because gun control legislation was killed by Harry Reid last week, the Marketplace Fairness Act has been rushed ahead, causing some senators including Sens. Kelly Ayotte (R-N.H.), Ron Wyden (D-Ore.), Jon Tester (D-Mont.), Jeanne Shaheen (D-N.H.), Marco Rubio (R-Fla), Mike Lee (R-Utah) and Ted Cruz (R-Texas) to ask for more time to study it. They concurred that the bill would “erode” states’ rights and “result in crippling compliance costs on small Internet businesses.” Sen. Max Baucus (D-Mont.), the chairman of the Finance Committee, said, “This bill is not ready for debate on the Senate floor. It has not been completely thought through. It is full of unintended consequences that could seriously harm America’s small businesses.”