The Senate’s top tax writers recently announced that all the tax breaks that currently litter our tax code could be on the chopping block if they rewrite the tax code this fall. Now, special interest groups are up in arms, fearful that they may lose the lucrative tax breaks they’ve become so accustomed to receiving.
National Journal reports that special interest groups spent $773 million during the 112th Congress on tax lobbying. They are working overtime to make sure their tax breaks don’t get whisked away in a tax code overhaul in Congress.
It would be worth every dime for them, too. The incentive lawmakers have to rewrite the tax code is clear: our current code is riddled with loopholes, resulting in massive economic distortion. Many of these tax breaks – roughly $1.3 trillion a year – should be eliminated as part of a broad rate reduction; yet, because of powerful special interests, they are “notoriously hard to eliminate.” Thus, tax writers’ in Congress have adopted a blank-state attitude toward them.
The Internet sales tax bill passed in the Senate on May 6 by a vote of 69 to 27. The bill’s fate is now in the hands of the House. This tax would not promote “fairness” as its official name – the Marketplace Fairness Act – suggests. There is bipartisan opposition to the bill, but unfortunately, there is also bipartisan support for it. Ever in favor of more money coming into government coffers, President Obama has promised to sign the bill into law if it makes it to his desk.
EBay and Amazon.com – both internet giants – are split on the issue, with the former in opposition and the latter in support of the tax. They have been weighing in on the debate since before the Senate passed the bill, and continued to make remarks over Memorial Day weekend:
“This legislation … is being called the Marketplace Fairness Act, but I strongly believe it creates an unfair tax burden for small online businesses,” eBay CEO John Donahoe wrote in an email to eBay account holders on Sunday.
So why is this so contentious an issue?
The truth is, it’s really not all that confusing, and if so many people weren’t interested in more taxes and less competition, it wouldn’t be so contentious.
Heritage explains in very clear terms that the Internet tax bill would harm online businesses and consumers. Right off the bat, what must be understood is that brick-and-mortar stores are not at an “unfair” disadvantage. Comparing them to online businesses is like comparing apples and oranges.
IMMIGRATION. Last night on “The Kudlow Report” Heritage Foundation President Jim DeMint explained to host Larry Kudlow what’s wrong with the Gang of Eight’s immigration plan: “It’s unfair, it costs too much, and it’s going to make the problem worse.”
He explains that the bill is going to give legal status and eventual citizenship to those who came here unlawfully, and the rest of the components of the bill are just promises.
Then, he added, the only way to solve this problem is to fix our immigration system in a way that “works for Americans” before we try to deal with the problems that our system has created.
This new internet tax cartel would be a massive burden to these businesses both because they would take a financial hit (which would be passed onto consumers as well) and because they would have to take numerous cumbersome steps to comply with the law.
Pro-tax advocates of the bill brush these concerns aside asserting that free computer software will be provided to online businesses to help them calculate taxes due and create a single entity to collect taxes for all jurisdictions in their state.
SEQUESTER. In the name of doing things “the fair way,” the White House is still demanding revenue to replace the sequester (sub. req’d):
The White House is clinging to its faltering sequester strategy even after announcing last week that PresidentBarack Obamawill sign a revenue-free fix to stop furloughs at the Federal Aviation Administration.
Press Secretary Jay Carney reiterated Monday that the White House is still demanding revenue as part of a broader sequester deal.
“It is the wrong way to reduce our deficit or eliminate the sequester by simply saying, ‘You know what, we’ll just ask seniors to deal with it. We’ll hold harmless millionaires and billionaires.’ … That’s not the way this can happen,” he said. “It’s not the fair and right way, and it’s not good policy, and that’s why the president insists that we need to do this in a balanced way.”