A battle royale is brewing on Capitol Hill after a bipartisan coalition in the Senate handily passed the Marketplace Fairness Act, the controversial bill that would impose a sales tax on Internet purchases. As present, online retailers must only charge tax if they have a brick-and-mortar presence in the state where the goods are sold. However, the new law would force retailers with over $1 million in revenue to charge sales tax in the 45 states (plus the District of Columbia) that require it. Obviously, fiscal conservatives aren't fans of new taxes so an army of anti-tax lobbyists are joining forces with a phalanx of Republicans in an effort to block the bill in the House. It's going to be a messy effort, but it also seems imminent that a tax like this will go into effect one way or another.
The tricky thing about this Internet tax bill is that it's actually very appealing to pro-small business Republicans, a fact that's split the party in half. Actually, nearly half of the 65 House co-sponsors of the bill are Republicans. "After 20 years, there is finally light at the end of the tunnel for our brick-and-mortar businesses," said Rep. Steve Womack of Arkansas, one of the Republican sponsors. "Saving local retail business depends on it, and it's now up to the House to act." The argument Womack is embracing is that tax-free online retailers have a leg up on local retailers who are forced to charge tax. It's a compelling argument, one that even major retailers like Amazon and Wal-Mart have embraced.
The bill's opponents disagree and say they're going to do whatever it takes to stop this bill. However, their argument seems less compelling. While some parties, like eBay, oppose the bill simply because they benefit from maintaining the status quo, others says that it will overcomplicate the tax code. However, the bill's authors thought of this, and intentionally kept the bill short — it's only 11-pages-long. That seems like a tweet compared to the 568-page report on how to overhaul the tax code that House working groups recently submitted to the House Ways and Means Committee. Despite its simplicity, though, the Marketplace Fairness Act would bring in an additional $12 billion in sales tax revenue. Now that's money that the government could use.
But again, for many of the bill's proponents on both sides of the aisle, this bill isn't just about taxes. It's about America. "It's about the way commerce has changed in America," Sen. Dick Durbin, an Illinois Democrat, told the press on Monday. "Bookstores, stores that sell running shoes, bicycles and appliances are at a distinct disadvantage. They've become showrooms."