White House endorses online sales tax measure

The Supreme Court ruled more than two decades ago that companies only have to collect from in-state customers, but also said that Congress could weigh in on the issue.

{mosads}With that in mind, retail groups have long pushed for legislation like the Marketplace Fairness Act, saying it would close a loophole that gives online retailers a leg up on them.

Supporters also say that customers are already supposed to pay taxes on online purchases when they file each year, and that the proposal could give billions in extra revenue to struggling state and local governments. The bill would also exempt small businesses with less than $1 million in out-of-state sales.

“Because these out-of-state companies are able to cut corners and play by a different set of rules, the cities and states lose out on funding for K-12 education, police and fire protection, access to affordable health care, and funding for roads and bridges,” Carney said Monday.

A full three-quarters of the Senate – 75 lawmakers, in all – backed the online sales tax proposal when it was voted on as an amendment to the chamber’s budget framework last month. That vote was nonbinding, but supporters said it showed their proposal was gaining momentum.

The bill is now bypassing the tax-writing Finance Committee on its way to the Senate floor. Several senior Finance members – including the panel’s chairman, Sen. Max Baucus (D-Mont.), and ranking Republican, Sen. Orrin Hatch (Utah) – have expressed opposition to the legislation.

Influential conservative groups like Grover Norquist’s Americans for Tax Reform and Heritage Action have also slammed the bill, saying it would be an unfair burden to force businesses to play tax collector for states where they don’t benefit from any services. The online retailer eBay is also an opponent.

Still, the issue does not break down cleanly along partisan lines. Several leading GOP governors, who have to balance their budgets each year, have endorsed the proposal, and top Republican sponsors in the Senate are also former state officials.

Top opponents – including Baucus and Sens. Ron Wyden (D-Ore.) and Kelly Ayotte (R-N.H.) – come from states without a sales tax.