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Will an Internet Sales Tax Ever Be Okay with America?

Will America ever be okay with an Internet Sales tax?  The answer to that question is ‘it’s highly unlikely.’  Remember, according to a recent poll commissioned by R Street and the National Taxpayers Union, 57 percent of likely voters opposes a federal Internet sales tax legislation, including 66 percent of Republicans.

Yet, proponents of the Internet Sales Tax are claiming new momentum in the House of Representatives for an Internet Sales Tax bill. So what would it take to make an Internet Sales Tax palatable to American voters? This week, House Judiciary Chairman Bob Goodlatte (R-VA) released seven principles to guide his committee in drafting their own version of the so-called Marketplace Fairness Act, which the Senate passed in May on a “lopsided vote.”

Briefly, the principles are:

1.       Tax Relief – Using the Internet should not create new or discriminatory taxes not faced in the offline world.
2.       Tech Neutrality – All businesses should be on an equal footing.
3.       No Regulation Without Representation – Those being taxed and regulated should have direct recourse to protest unfair or discriminatory rates and enforcement.
4.       Simplicity – Government should not stifle businesses with onerous compliance requirements.
5.       Tax Competition – Government should be encouraged to compete with one another to keep tax rates low.
6.       States’ Rights – States should be sovereign within their physical boundaries.
7.       Privacy Rights – Sensitive customer data must be protected.

Heritage notes:

A plan consistent with these principles could still be considered. But so far, no such plan is in sight; certainly the Senate-passed MFA falls far short of the mark. And it’s not clear what, if any, plan would pass muster. But that’s not a legislative failure; it’s the way the system should work.

Lawmakers would do well to keep these principles in mind if they attempt imposing an Internet Sales Tax bill.  As the R Street/ National Taxpayers Union poll indicated, voters – not only conservatives but voters in key swing demographics — are strongly opposed to an Internet Sales Tax bill that harms businesses and consumers, and legislation that goes against the principles listed above would cause harm.

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