Last Chance for the 115th: Keeping the Internet Sales Tax at Bay

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This June here at OpenMarket we’ll be looking at what the 115th Congress, which began January 3, 2017 and runs through January 3, 2019, has accomplished so far and what might still be achieved for limited government and free markets before it’s over. Read more about the Competitive Enterprise Institute’s recommendations for legislative reform here. 

Bad Internet sales tax legislation (mercifully) continues to stall in Congress. Pro-tax expansionists like Rep. Kristi Noem (R-SD) made a big political push to tie the ill-advised Remote Transactions Parity Act to the omnibus-spending bill in March, but to no avail.

Congress should continue to reject that legislation and its sister bill in the Senate, The Marketplace Fairness Act sponsored by Sen. Mike Enzi (R-WY). Both bills are compliance nightmares for small sellers online and would reduce healthy tax competition among the states—much to the detriment of consumers. Online shoppers would experience both plans as de facto tax hikes.

Across the street, the U.S. Supreme Court is busy hearing South Dakota v. Wayfair, a case that challenges the default rule that requires a seller to have a physical presence, like a store or warehouse, in a state before that state can impose sales tax obligations. You can read CEI’s amicus brief in that case here.

Regardless of the high court’s decision, Congress should consider the ideas in The No Regulation without Representation Act from Rep. Jim Sensenbrenner (R-WI) and an origin-based approach to the online sales tax question. These policies would protect small businesses and consumers from expanded state taxing powers and preserve beneficial tax competition among states, and be consistent with the “Oppose Burdensome Internet Sales Taxes” section of CEI’s “Free to Prosper: A Pro-Growth Agenda for the 115th Congress.”

Read previous posts in the “Last Chance for the 115th” series: