Internet sales taxes — What really happened?

Elections remind us that nothing — not a resume, not money, not editorial endorsements — can save a bad candidate. If a candidate is out of sync with voters, it’s over.

The same is true of legislation. Case in point: the Senate-passed Marketplace Fairness Act to expand sales tax enforcement on the Internet. A huge campaign funded by the largest retail companies in America, supported by many tax-hungry states and localities and fawned on by most local newspaper editorial boards, is falling flat.

Proponents claim that the misnamed Marketplace Fairness Act enjoys meaningful bipartisan support. But on closer examination, both that claim and the bill’s chances evaporate. First, in Congress, the real support is overwhelmingly Democratic. Second, among actual voters, the only thing bipartisan is strong opposition. Finally, not only do most Republicans in Congress, as well as Republican voters, oppose the idea of expanding state tax collection and enforcement powers across the Internet, but the conservative “movement” opposes the idea viscerally. They see it as the very definition of expanding government power.

{mosads}Political analysts know that the conservative element of the GOP is still the guiding light for Republicans. And the conservative side “won” the vote among Senate Republicans when the chamber voted on the proposed new tax scheme in 2013. Yes, Republican Sen. Mike Enzi (R-Wyo.) was a leading proponent. But the overwhelming support came from Senate Democrats, with vocal and effective leadership from Majority Leader Harry Reid (D-Nev.) and Sen. Dick Durbin (D-Ill.) being coupled with support from the president.

This motivated conservatives like Sens. Ted Cruz (R-Texas) and Rand Paul (R-Ky.) to speak out. They exposed the scheme as a big government tax grab. Conservative thought leaders lined up solidly on the side of smaller government and limited reach. Ultimately, 23 Republican senators opposed it, while 22 were supportive.

Beyond the pure numbers, the Republican vote in the Senate also exposed a clear generational division on the Internet economy and the role of government in the Internet Age. The median age of the Republican senators opposing the sales tax bill was 54, while the median age in favor was 62. There were 11 Republican senators under the age of 55 who voted “no,” while just one voted “yes.” Lastly, every Republican senator under the age of 50 voted “no.” Future conservative leaders in the GOP clearly are not looking for more regulation, taxation and government power on the Internet.

Remember, too, that the Senate Democratic leadership bypassed the committee process in order to cover up flaws with the bill and also to smartly corner the Republicans into a divisive up-or-down vote pitting giant retailers against conservative activists.

Experienced political types looked past the pro-Internet tax cheerleading and saw that the majority of Senate Republicans opposed the bill. In the Republican-controlled House, it was therefore a no-brainer to foresee that leadership there would send it through the normal legislative process in an effort to develop an alternative with broad Republicans support. Almost immediately, House legislators exposed the bill’s fundamental problems on conservative principles and understood why voters would oppose a new tax regime intended to transfer more money from consumers to government.

Look deeper at the Obama-Reid-Durbin-supported bill in the House: just 25 Republican co-sponsors from among 233 GOP members (not counting the bill’s sponsor, Rep. Steve Womack [R-Ark.]). Hardly strong support. But most important, only one Republican, Rep. Mike Simpson (R-Idaho), has co-sponsored the bill since it was maneuvered through the Senate 18 months ago. It should shock no one that a big government Internet tax bill would die in the House.

Even more telling is what voters think. The supposedly bipartisan Senate Internet sales tax bill, after months of intense pro-tax lobbying, media cheering and supposed momentum, has fallen flat with actual people. A June 2013 Gallup poll indicated bipartisan opposition, 57 to 39 percent, among voters. Opposition of those under age 50 exceeded 60 percent, while those under 30 opposed by over 70 percent! Polls showed Republicans and independents both lined up solidly against. A stinker.

At this point, the astute political question is: Why would anyone think the Republican House would move such a bill? It is solidly opposed by the conservative thought leaders that still comprise the most important bloc in the party, it violates basic conservative principles related to the expansion of government power and reach and it is overwhelmingly opposed by conservative voters. In addition, it is also strongly opposed by key swing voters, including independents and active Internet users.

The polling data should lead political thinkers in both parties to steer clear of this proposal precisely because it is such a loser with key swing voters they will need to compete in 2016.

This piece has been corrected to note that Rep. Mike Simpson (R-Idaho) is a co-sponsor of the Marketplace Fairness Act and to reflect the number of Republican co-sponsors of the bill.

Bond is the executive director of the We R Here Coalition, an organization of 13,000 small online retailers dedicated to preserving online retail competition. Previously, he served as under secretary of Commerce for technology under President George W. Bush. He was chief of staff to the late Rep. Jennifer Dunn (R-Wash.) when she served as Vice Chair of the House Republican Conference.