The U.S. Senate’s passage of the Internet sales tax Monday shifts the focus to the Republican-led House, where two Virginia congressman will play a significant role. Majority Leader Eric Cantor (VA-7) and House Judiciary Chairman Bob Goodlatte (VA-6) are viewed as “critical to the bill’s passage,” according to a report in Bloomberg.
The misnamed Marketplace Fairness Act (S.743) is anything but fair. It would force retailers to act as tax collectors for states in which they have no voice. The tax hike on consumers could total billions of dollars annually.
According to Bloomberg, neither Cantor nor Goodlatte has endorsed the plan. That stands in contrast to Virginia Governor Bob McDonnell, one of the bill’s most vocal supporters. McDonnell wants to use revenue generated by an Internet sales tax to pay for his transportation plan.
Here’s more from Bloomberg’s report on where things stand:
Goodlatte’s committee will consider the legislation (H.R. 684), the Marketplace Fairness Act. Cantor sets the agenda for which bills reach the House floor. And McDonnell has stepped to the forefront of the issue nationally by hinging lower gas taxes on the eventual collection of more taxes on remote sales.
Cantor has not publicly stated his position on the issue; a spokeswoman did not return an email from BNA seeking comment.
Goodlatte, asked for comment the week of Feb. 25, told BNA, “We’re working on it. It’s got a long way to go. That’s all I’m going to say.”
Virginia’s two Democrat senators, Mark Warner and Tim Kaine, supported the bill Monday when it passed on a 69-to-27 vote. If there was a silver lining, more Republicans opposed the plan (22) than supported it (21). Such a scenario could complicate matters in the House, forcing GOP leaders to rely on Democrats to pass the bill.
The legislation’s supporters have a strong lobbying presence on Capitol Hill. Fortunately, the opposition is just now beginning speak out — and got a big boost when House Speaker John Boehner (R-OH) said he probably wouldn’t support the measure because it placed a “big burden on some very small businesses.”
Last week I had the opportunity to interview Gloucester-based businessman Catesby Jones, president of clothing retailer Peace Frogs. He described the Internet sales tax as a job-killing plan that would create a regulatory compliance nightmare.
Jones told the Daily Press:
Let’s say I have to hire one or two people to handle the paperwork. That’s a huge percentage of my sales. This is going to be a huge barrier to entry for new businesses. They’re not going to be able to afford to deal with it. This is solely to benefit the large corporations.
The burden on small businesses would be huge. Many don’t have the administrative resources to comply with more than 9,600 tax jurisdictions in the United States.
Brick-and-mortar businesses, by comparison, are required to comply with only local sales tax.
Then there’s the threat of 46 out-of-state audits. Just as Jones warns, businesses will have to hire costly lawyers and accountants to deal with burdensome paperwork and complex tax rules.
Do you run a business that would be negatively impacted by the Internet sales tax? Leave a comment below and share your story.
