Enzi Unfazed by Norquist’s Opposition to E-Tailer Taxes
There is a problem with the congressional push to reform the way states collect online sales taxes: Grover Norquist. Sen. Mike Enzi, R-Wyo., told us it’s “a terrible disappointment” that Americans for Tax Reform (ATR) opposes the Marketplace Tax Fairness Act (S-1832), in an interview following his speech to the National League of Cities conference Tuesday. The bill “does not raise taxes, it only collects what is owed,” Enzi said.
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But Norquist, the founder and president of ATR, remains opposed to the bill because “forcing out-of-state businesses to collect and pay sales tax ... is a new form of taxation,” according to the group’s statement (http://xrl.us/bmxz4w). The bill would result in more taxes for citizens and an “automatic tax increase in twenty-four states that are members of the Streamlined Sales and Use Tax Agreement (SSUTA),” the group said. Norquist has secured written pledges from the vast majority of Republican members of Congress to not support increased taxes, and ATR sometimes uses those pledges against signatories judged to have violated them in their re-election bids.
Enzi said he was not concerned by ATR’s opposition and told local and state officials Tuesday that “this is the year” to pass a bill that will level the playing field between online and brick and mortar retailers. Enzi said he was optimistic that the bill would get enough support this session because it had gained a crucial ally, Amazon.
Amazon had formerly been a staunch opponent of online sales taxes but abruptly changed course when S-1832 was introduced last year. The bill is a “win-win resolution,” Amazon said (WID Nov 10 p1). “This bill will allow states to obtain additional revenue without new taxes or federal spending and will make it easy for consumers and small retailers to comply with state sales tax laws.”
The Marketplace Fairness Act intends to modernize a precedent set by the Supreme Court’s 1992 decision, in Quill Corp. v. North Dakota. The justices forbid states from requiring out-of-state businesses to charge state sales taxes due to the burden of compliance with varying state sales tax rules. “The [Supreme] Court has invited Congress to change the law,” Enzi said.
Enzi said as the former owner of a retail shoe business he understands the negative effects of states’ inability to collect out-of-state online sales taxes. “It is not fair to the local merchant,” he said. “You need to support those local stores, the stores that are paying property taxes, that are hurting locally, that contribute to the community in a number of ways.”
"The Internet is no longer in diapers,” Enzi said. “The Internet has matured, and as a mature industry it is time we collect those tax dollars.”
But online retail giants eBay and Overstock continue to protest the undue burden they say it would place on most small online retailers (WID Dec 1 p1). EBay is particularly opposed to the bill’s $500,000 small business exception, which it says harms the ability of small online businesses to compete. “The Small Business Association defines a small business as being up to $30 million in sales. At that level you probably have one facility ... you are really small in the world of retail.”
Enzi said he was open to negotiating with eBay on the bill’s small business exemption but said $30 million is “not an exclusion.” “We'll talk to them some more,” he told us. “If we can get some consensus on the number so that the municipalities and counties and states are getting their money that’s in their law already, then we would probably do it.”
Senate Majority Leader Harry Reid, D-Nev., has said that “if we can get to critical mass in the Senate he will bring it up for the vote,” Enzi told state and local officials. That means “if we get 60 votes on this we can pass it,” he said. Currently the Marketplace Fairness Act has 12 co-sponsors: Enzi, Lamar Alexander, R-Tenn.; Dick Durbin, D-Ill.; Tim Johnson, D-S.D.; John Boozman, R-Ark.; Jack Reed, D-R.I.; Roy Blunt, R-Mo.; Sheldon Whitehouse, D-R.I.; Bob Corker, R-Tenn.; Mark Pryor, D-Ark.; Jeff Bingaman, D-N.M.; and Ben Cardin, D-Md.