Online sales tax bill provides shelter to big businesses, more cash for governments

ALL SMILES: might be smiling about the new online sales tax passed by the U.S. Senate, but it’s bad news for taxpayers.
ALL SMILES: might be smiling about the new online sales tax passed by the U.S. Senate, but it’s bad news for taxpayers.

HARRISBURG, Pa. — A push for online sales tax “fairness” is more about protectionism than equal protection.

Some have drawn that conclusion from after the U.S. Senate OK’d of the Marketplace Fairness Act earlier this week.  The bill — if it becomes law — would allow states to collect sales taxes from online transactions, even if the companies conducting the transaction are located outside the borders of the state.

“States and local governments want more money, and with this bill they’d get it. Huge online and traditional retailers like Amazon and Walmart want even more advantages over smaller competitors. With this bill, they’d get those additional advantages,” said Steve Stanek, a research fellow for the Heartland Institute, a free-market think tank based in Chicago.

In order to comply with the new rules, online retailers will have to collect and send taxes to more than 9,000 different taxing jurisdictions, according to the NetChoice Coalition, an advocacy group for small online sellers that opposed the bill.

All businesses will have a new burden of complying with the online sales tax rules. But larger online retailers — like, for example, which supported the bill in the U.S. Senate — will be able to absorb the cost of compliance while their smaller competitors might not.

That could explain why E-Bay — which organizes thousands of individual sellers into a single marketplace, and used that organizational power to form a coalition of groups opposed to the Marketplace Fairness Act — opposed the legislation.

And brick-and-mortar stores like the idea because their competitors, who often can sell items more cheaply because they don’t charge sales tax, will have to collect the tax as well.

Matthew Shay, president and CEO of the National Retail Federation, said the Senate vote was a significant step for “tax fairness.”

“This bill and its companion in the House will level the playing field for all retailers — both online and off — while safeguarding states’ rights,” Shay said in a statement.

There was plenty of big money behind the bill’s passage.

Advocates for the bill outspent opponents of the new online sales tax measure by a margin of 13-to-1, according to an analysis by MapLight, a nonpartisan research organization that tracks lobbying spending.

MapLight’s analysis shows that more than $57 million was spent lobbying Congress on the bill, with $53 million coming from companies and groups supporting it.

Amazon alone spent more than $208,000 lobbying senators to pass the bill, and senators who supported the bill got, on average, 29 percent more campaign cash from all sources than those who voted against it, according to MapLight.

The bill faces an uncertain future in the U.S. House of Representatives, where the Republican majority seems unwilling to support legislation that could be seen as a tax increase on American businesses and people making purchases online.

Eric Boehm is a reporter for and bureau chief for PA Independent. Contact him at