Katie McAuliffe

Retailers claim nationally that states could raise $23 billion in revenue if they collected Internet sales tax, and then they whine when taxpayers point out that it is a tax increase. In fact, this $23 billion collection number that they cite comes from .... wait for it .... the National Council of State Legislators.

Yes, some state legislators and governors want to reach across their state borders to your pockets, where you can't vote against them and take your money. Yes, you get hit when you travel to another state and pay their taxes, but with this new tax you aren't even in their state.

An amendment to the Senate budget, which was described as an amendment to "establish a deficit-neutral reserve fund to allow states to collect sales and use taxes already owed under state law," passed the Senate.

It is intended to be proxy-vote for a bill called the Marketplace Fairness Act.

Here are the top five reasons conservatives are against this bill, beside it being a tax increase:

1. The bill expands state tax authority - State governments will be able to tax across their borders despite clear legal and judicial precedent arguing otherwise. Plus, in the case of an audit, businesses would be required to settle disputes with out of state revenue boards in out of state courts.

2. The bill saddles small business with bureaucratic red tape - Small businesses would be forced to accommodate over 9,000 highly variable state and local tax codes, collection standards, and remittance schedules.

3. The bill threatens privacy - Business and state revenue boards with a track record of losing private information will have more chances to do so.

4. The bill discourages tax competition -- Rather than competing to lower taxes and attract businesses, states will compete to raise taxes on residents of other states.

5. The bill imposes bigger and bigger government - The bill will open the door for further government intrusion into the Internet and for states to reach across their borders for other taxes.

At the end of each year, businesses are responsible for sales tax.

Businesses can choose to tax their customers at the point of sale or pay what they owe in sales tax at the end of the year. Businesses, therefore, act as a tax collection arm for the state in which they are located and are the immediate taxpayer, not the consumer. During an audit, it is the business that is responsible for settling any outstanding balances. The state revenue departments do not pursue consumers over individual purchases; the state revenue departments pursue the business.


Katie McAuliffe

Katie McAuliffe is federal affairs manager at Americans for Tax Reform.