New Internet sales tax bill could end online shopping loophole

Tax-free online shopping could soon be a thing of the past, if senators supporting Senate Bill 743, known as the Marketplace Fairness Act, get their way. The most controversial part of the act would require online retailers to charge a sales tax to customers depending on the state they live in.

Sen. Mike Enzi, a Republican from Wyoming, introduced the bill on April 16. The bill finally came to the floor on Monday and it already has bipartisan support.

Host Carmen Russell-Sluchansky spoke with Tracy Gordon, a fellow for economic studies at The Brookings Institution, to discuss the bill.

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Sen. Dick Durbin, a Democrat from Illinois, has pledged support for online taxation, saying that it is unfair to local retailers if a customer is able to walk into a store, receive expert advice from employees, leave, then buy the same product online tax-free. This gives online retailers an unfair advantage.

“You have businesses all around America in main streets in shopping malls, collecting sales tax on the things they sell competing with internet retailers who do not collect the sales tax,” Durbin said.

Online retailers had been spared taxation because, previously, online shopping was in its infancy and bolstering that segment of the economy outweighed the need for the tax revenue that may have been gained. Now with budget problems plaguing the country, states are hungry for additional revenue streams.

Meanwhile, some on the same side of the aisle as Durbin, like Sens. Ron Wyden and Max Baucus, spoke against the bill, saying that it will allow states with high sales taxes to create a financial burden remotely on businesses in other states. They also claim that it will give international retailers an even greater competitive advantage.

“The Marketplace Fairness Act is going to hobble the Internet economy and constrain online commerce. It is in my view a recipe for economic stagnation,” Wyden said.

About Carmen Munir Russell-Sluchansky 360 Articles
Carmen is a multimedia journalist based in Washington, DC whose work has appeared in a variety of outlets including National Geographic, NBC News, the BBC, Asia! Magazine, The China Post, Chicago Tribune and Orlando Sentinel.