Power and Money Grab from States

  • Taxation and Regulation without Representation: The proposed law would allow states to impose massive regulation and taxation requirements on online businesses outside their jurisdictions. This overreach would break down the federalism protections our Founding Fathers set up in the Constitution. 

  • States Hungry for More Spending: States already see the potential tax revenue as a way to pad their budgets, which, unlike the federal budget, must balance each year. Rather than examining their budgets for areas to cut back, states prefer to subject online small businesses to costly and complicated regulations.    

Online Retailers Face Disadvantages

  • Costly Compliance Mess: Online retailers will be placed at a distinct disadvantage by being forced to collect sales tax from every customer and distribute it to the appropriate state and local tax agency. With nearly 10,000 tax jurisdictions, online businesses have a huge deterrent in trying to handle tax codes while their brick-and-mortar counterpoints collect taxes only for the physical location they’re based in.

  • Potential for 46 Out-of-State Audits: The compliance cost gets even worse for online sellers if they happen to make a mistake. They can be audited by any of the 46 states that collect sales tax, as well as the District of Columbia and various territories. Audits cost time and money that could be better spent building a business and serving customers.

Online Consumers Lose Too

  • Threat of Higher Costs and Less Choice: Consumers could face higher costs for online shopping if Congress approves the sales tax bill. Not only would online retailers be required to collect sales tax from the buyer, they could also add more costs for having to comply with new regulations. Worse, some online marketers could exit the market or refuse to sell to certain states or territories, limiting choice for consumers who prefer to shop online.

  • Remove the Threat Now: Washington should remove any threat of an Internet sales tax. Businesses and shoppers need to know now they will not be hit with a tax increase that could hamper e-commerce, kill jobs, and raise costs for everyone.

Read More on the internet sales tax on Heritage