On Monday, the Senate approved a bill that would enable states to collect sales tax on merchandise bought on the internet, “under current law, states can only collect from companies that are physically located within their borders.”
The bill passed on a 69-27 vote. According to The Hill, 22 Republicans voted for the bill while 19 opposed.
Immediately, those like Sen. Ted Cruz (R-TX) noted the bill favors “politicians looking for more tax revenue and big businesses looking to make it harder for their competitors to survive.”
For years, retail groups have complained that customers come to their stores to look at products only to buy them online; state governments have said they lose “as much as $23 billion in annual taxes from online sales to go uncollected.”
Amazon and Republican Virginia Gov. Bob McDonnell support the bill while organizations like eBay oppose.
Even though the “bill would exempt small businesses that earn less than $1 million annually from out-of-state sales, and requires states to provide retailers with software to calculate sales taxes based on a buyer’s zip code,” opponents said the bill would simply give government more taxing power and hurt economic growth.
The bill has a tougher road in the House, where those like Budget Chairman Paul Ryan (R-WI) have expressed concerns.
Conservative groups like Heritage Action oppose the bill and politicians like former Alaska Governor Sarah Palin issued a blistering statement against new taxes in a down economy.
“Please step away from your Washington, DC bubble and get back in touch with the hard working people who sent you there,” Palin wrote. “Read the planks in our party’s platform and then read our lips. Learn from history or face repeating it: NO NEW TAXES.”
On the Senate floor on Monday, Cruz noted that many single mothers and Hispanic immigrants start successful internet businesses, and the internet tax would hurt economic growth and the aspirations entrepreneurs on the web.