Do You Support a Sales Tax for Online Purchases?

Iowa Sen. Tom Harkin, a Democrat, voted in support of a bill that would require merchants to collect sales tax for online purchases, while Sen. Chuck Grassley, a Republican, cast a vote againt the bill.

The Marketplace Fairness Act passed the U.S. Senate 69-27 on Monday. Next up, the legislation goes to the GOP-led House. President Barack Obama has previously said he supports the bill.

Supporters say the bill would level the paying field for traditional retailers, while opponents include anti-tax activists and retailers who say it will be overly burdensome.

TELL us in comments: Do you support a sales tax for online purchases?

Statement from Harkin:

Senator Tom Harkin (D-IA) today issued the following statement after the U.S. Senate approved the Marketplace Fairness Act by a vote of 69 to 27. The legislation would strengthen Main Street Iowa businesses by authorizing states to require remote sellers such as online shopping sites to collect and return sales tax related to purchases made by residents of that state. Harkin is a cosponsor of the measure and has supported every similar measure to come before the Senate over the past 20 years.

“This legislation levels the playing field for Iowa’s Main Street businesses, which are at a disadvantage as residents look at merchandise in local stores and then order the product online. It also means a more level playing field for our state and local governments, which are experiencing a loss of revenue that has to be made up with fewer services or higher property or other taxes. Now that the U.S. Senate has sent a clear message, I hope to see the bill become law this year.”

Statement from Grassley:

“There are a lot of questions about how this legislation would work as a practical matter.  How would it be enforced, even on foreign-based businesses, and what kind of costs and administrative burdens it would put on all businesses? Could businesses face audits from any state that acts on the authority given by the legislation? What about the lack of certainty regarding how far the tax authority could be taken by states? Would it result in states imposing taxes on financial transactions, for example?

“In addition, there’s an unresolved Constitutional concern. Congress has the authority to allow states to exercise authority across state lines under the commerce clause, but Congress does not have authority to loosen requirements under the due-process clause, which requires a minimum level of contacts between a state and a business before a state may exercise taxing authority over a business. A single sale in a state isn’t likely to meet that standard.

“These are important questions, and they should have been addressed in the Senate committee of jurisdiction, the Finance Committee. Bringing this bill directly to the floor circumvented the committee process and the scrutiny and expertise needed for good tax policy.”