Internet access tax moratorium stalled in Senate

posted at 8:41 am on July 18, 2014 by Jazz Shaw

The President has been fond of telling Republicans in Congress that they need to get off the stick and do their jobs. Granted, this is often on subjects where there are deep philosophical divides between the parties, but if he comes in off the golf course long enough he might notice that some work is still being done on the hill. And though it may sound miraculous, there are a few items which still enjoy a fair amount of bipartisan support. One of these legislative unicorns is the proposal to make permanent a moratorium on internet access taxes. Well, the House passed it this week on a voice vote.

The House on Tuesday approved a measure to make permanent an existing federal moratorium on Internet-access taxes, opening the door to a clash with the Senate later this year.

In a sign of its bipartisan popularity, the measure passed the House on a voice vote.

The 15-year-old moratorium on Internet-access taxes prevents most states and local governments from applying access taxes on Internet connections, of which there are about 262 million in the U.S. It is set to expire later this year.

So there you have it, folks. Looks like we’ve got a win-win situation on our hands. This no-brainer should be sailing through the upper chamber and onto the President’s desk in no time flat and we’ll avoid… wait. What’s that you say? It’s not going to?

The move to extend the moratorium creates an opportunity for senators who want to combine it with legislation allowing states to collect online sales tax from many out-of-state Internet merchants. Right now that is difficult for states, because the Supreme Court said in 1992 that a state can’t force an out-of-state merchant to collect its sales tax unless the merchant has a physical presence in the state.

With the moratorium bill now moving from the House to the Senate, key senators are expected to add the online-sales-tax legislation. That bill passed the Senate last year, but has been bottled up in the House.

Well, well… if it isn’t our old friend the Marketplace Fairness Act. And it seems that there are certain members of the Senate – no matter which party they are from – who are willing to hold the internet access tax moratorium hostage unless they can get the MFA tacked on to it as a rider. And if this strategy fails to be resolved in the next four months or so, all of you could potentially start paying taxes for your web access at home just as most of you already have for phone or other data driven services. And let’s face it… at this point pretty much everyone has internet access.

We’ve discussed the MFA at great length here, but no matter how you feel about it, it has no place riding along on this bill. If it’s going to pass, it needs to have the support to stand on its own feet. There’s a bill ready to go in the Senate with sponsorship from both parties, but it has to get past Harry Reid. This tax moratorium is low hanging fruit and should already have been taken care of before everyone started sliding toward vacation mode.


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

“It’s the fault of the Koch Brothers” -Harry “Pederast” Reid.

ConstantineXI on July 18, 2014 at 8:43 AM

The tax monster will never be satisfied.

Steve Eggleston on July 18, 2014 at 8:44 AM

What difference, at this point, does it make….

When the IRS will just have hard rive crashes…..

Electrongod on July 18, 2014 at 8:47 AM

27 comments or bust!

Bishop on July 18, 2014 at 8:48 AM

It’s sort of neat and simultaneously horrifying to realize that it doesn’t matter at all. If the moratorium passes, the feds will spend X amount of money. If the moratorium doesn’t pass, the feds will spend exactly the same X amount of money.

rogerb on July 18, 2014 at 8:50 AM

To think this country was founded over a dispute about a 2% tax, makes the head spin!

DDoyle0224 on July 18, 2014 at 8:51 AM

The tax monster will never be satisfied.

Steve Eggleston on July 18, 2014 at 8:44 AM

No, because satisfying it is mathematically impossible.

100% income taxes wouldn’t balance this budget (and you know the rifles will come out long before it gets to 100%). And the money doesn’t exist on the whole planet to pay for $100 trillion (and climbing) in unfunded government mandates…

This is why the whole thing is headed for total collapse with no means of stopping it. This was per-ordained before Obama, but what he has done is move the collapse date WAY up.

ConstantineXI on July 18, 2014 at 8:52 AM

Unbelievable.

I am so looking forward to this fall’s midterm election. Hopefully, there will be GOP/Conservative majorities in both houses. There might not be enough to override a presidential veto, but it will be a real treat to see Harry Reid tossed out of his position as head legislative kidnapper.

TKindred on July 18, 2014 at 8:54 AM

Harry Reid is the biggest hindrance to bills getting passed that this nation has ever seen.

sadatoni on July 18, 2014 at 9:00 AM

I wanna see those Senators calling for a regressive tax where no tax existed before, right in time for the election. Yeah, that will work like a magical charm in townhalls of either political stripe across their respective states…

Rix on July 18, 2014 at 9:06 AM

Harry Reid is the biggest hindrance to bills getting passed that this nation has ever seen.

sadatoni on July 18, 2014 at 9:00 AM

Well, Reid and democrats really don’t care about anything except their “progressive” agenda. Legislation won’t even go up for a vote unless it’s what they want … whether it’s good for the country or not.

darwin on July 18, 2014 at 9:15 AM

Reid: “It’s the evil Koch brothers…”

Obama: “I don’t pay for internet access, what are you talking about?”

McConnell: “What’s the internet?”

And so, the clueless idiots fumble onward.

captnjoe on July 18, 2014 at 9:15 AM

Well, well… if it isn’t our old friend the Marketplace Fairness Act. And it seems that there are certain members of the Senate – no matter which party they are from – who are willing to hold the internet access tax moratorium hostage unless they can get the MFA tacked on to it as a rider

Which is why I hate both parties.

rbj on July 18, 2014 at 9:18 AM

With regard to Members of Congress taking vacations, aren’t you supposed to be vacationing from something… like work, for example? It seems to me that Washington, D.C. itself has become a vacation paradise. It certainly is for The Missing President, also known as the Burger in Chief. Congress has fallen right in line, at least on the Senate side.

They sure need a break… from being no good, worthless, sons of…
anarchy? Not the term I would use, but keeping it clean.

IndieDogg on July 18, 2014 at 9:19 AM

There is nothing fair about the MFA. It’s just a way for states to force companies who have no physical presence in the state, and do not benefit from state and local sales taxes, to do the state’s job of collecting those taxes from the consumer who owes them. Most states already require consumers to report internet purchases on a use tax form, and pay sales taxes on those purchases, but those laws aren’t enforced. How about states start enforcing their own laws, and stop trying to make small businesses across the country do the state’s job of collecting taxes?

mbs on July 18, 2014 at 9:23 AM

Most states already require consumers to report internet purchases on a use tax form, and pay sales taxes on those purchases, but those laws aren’t enforced. How about states start enforcing their own laws, and stop trying to make small businesses across the country do the state’s job of collecting taxes?

mbs on July 18, 2014 at 9:23 AM

It is physically impossible for any State to enforce it’s out of state sales tax purchase laws. It simply cant be done in any way unless every person in their State self reports Out of State Internet sales which is never going to happen.

Johnnyreb on July 18, 2014 at 9:35 AM

If the moratorium passes, the feds will spend borrow X amount of money. If the moratorium doesn’t pass, the feds will spend borrow exactly the same X amount of money.

rogerb on July 18, 2014 at 8:50 AM

FIFY

Yeah, that will work like a magical charm in townhalls of either political stripe across their respective states…

Rix on July 18, 2014 at 9:06 AM

Which is why I am sure they will let it die a quiet death, rather than actually fight to mark it up and push it through the Senate. If it dies quietly, no one will be the wiser.

GWB on July 18, 2014 at 9:36 AM

It is physically impossible for any State to enforce it’s out of state sales tax purchase laws. It simply cant be done in any way unless every person in their State self reports Out of State Internet sales which is never going to happen.

Johnnyreb on July 18, 2014 at 9:35 AM

It’s not impossible, but it will eventually take an extremely intrusive national government to accomplish it.

Again, if they want to be fair, just insist that “point of sale” equals wherever the product ships from, and charge sales tax at point-of-sale – just like brick and mortar stores. Much easier on businesses, and it’s fair since it doesn’t advantage one sales method over another.

GWB on July 18, 2014 at 9:40 AM

Taxtaxtaxtaxtaxtaxtaxtaxtaxtaxtaxtax – move to Ireland.

vnvet on July 18, 2014 at 9:43 AM

It’s sort of neat and simultaneously horrifying to realize that it doesn’t matter at all. If the moratorium passes, the feds will spend X amount of money. If the moratorium doesn’t pass, the feds will spend exactly the same X amount of money.

rogerb on July 18, 2014 at 8:50 AM

actually that is wrong, given history, they will spend/borrow 10 times X if it passes, see baby boomers and social security for an example.

RonK on July 18, 2014 at 9:44 AM

It’s not impossible, but it will eventually take an extremely intrusive national government to accomplish it.

Already in place, my friend.

partsnlabor on July 18, 2014 at 9:44 AM

It is physically impossible for any State to enforce it’s out of state sales tax purchase laws. It simply cant be done in any way unless every person in their State self reports Out of State Internet sales which is never going to happen.

Johnnyreb on July 18, 2014 at 9:35 AM

Of course it’s possible. Increase the penalties and require some of the big internet companies like Amazon to report large purchases to the state of the purchaser’s residence. And that’s just off the top of my head, I suspect someone who actually knows something about this could come up with a better plan. People who spend a lot online will start reporting. No taxing entity will ever collect all taxes due, but they can get a chunk of them. And if the guy who spends $20 on a one-time purchase from a small website in another state doesn’t report, who really cares?

It’s not necessary to force small web businesses out of the market just because the state doesn’t want to do it’s job. And who do you think is pushing this bill? It’s Amazon and other large web companies who have the resources to collect sales taxes for 50 different states and who knows how many localities. This bill has little to do with taxes, and a whole lot to do with limiting the market to large companies.

mbs on July 18, 2014 at 9:49 AM

Already in place, my friend.

partsnlabor on July 18, 2014 at 9:44 AM

Very true, but they will have to up their game an order of magnitude to make that happen consistently. And, don’t think they wouldn’t love to do that. It would be moving from the tyrannical farm team to the majors. And this government is nothing if not dreamers.

GWB on July 18, 2014 at 9:50 AM

Again, if they want to be fair, just insist that “point of sale” equals wherever the product ships from, and charge sales tax at point-of-sale – just like brick and mortar stores. Much easier on businesses, and it’s fair since it doesn’t advantage one sales method over another.

GWB on July 18, 2014 at 9:40 AM

my thoughts exactly, actually it should by where it is sold, e.g. CA, CA tax, OR, OR tax

RonK on July 18, 2014 at 9:52 AM

It’s not impossible, but it will eventually take an extremely intrusive national government to accomplish it.

Again, if they want to be fair, just insist that “point of sale” equals wherever the product ships from, and charge sales tax at point-of-sale – just like brick and mortar stores. Much easier on businesses, and it’s fair since it doesn’t advantage one sales method over another.

GWB on July 18, 2014 at 9:40 AM

In my opinion, the problem with that plan is that brick and mortar stores have an interest in collecting sales taxes for their locality because they benefit from those taxes. If my business is in Oklahoma, why should I be forced to collect sales taxes for San Francisco and California if someone from S.F. orders a product from my website? The purchaser owes the taxes to the state, county, city, etc., so why am I involved? And many small web businesses don’t even have a physical store, they operate out of their homes. The internet removed so many barriers to entry into the marketplace for small operators, which was great for the economy, but this bill will erect huge barriers. Again, this is about forcing small businesses out of the market. That will be the end result.

mbs on July 18, 2014 at 9:54 AM

It is physically impossible for any State to enforce it’s out of state sales tax purchase laws. It simply cant be done in any way unless every person in their State self reports Out of State Internet sales which is never going to happen.

Johnnyreb on July 18, 2014 at 9:35 AM

actually Illinois did with purchases in Indiana, and Mass was trying to get New Hampshire to collect Mass sales taxes for them, on purchases Mass residents made in New Hampshire.

RonK on July 18, 2014 at 9:59 AM

Good discussion of the problems with the MFA

http://online.wsj.com/news/articles/SB10001424127887324328904578621612217620052

mbs on July 18, 2014 at 10:03 AM

27 comments or bust!

Bishop on July 18, 2014 at 8:48 AM

Just made it!!

“Bust” was looking a winner there for awhile.

Bitter Clinger on July 18, 2014 at 10:18 AM

Taxtaxtaxtaxtaxtaxtaxtaxtaxtaxtaxtax – move to Ireland.

vnvet on July 18, 2014 at 9:43 AM

Won’t help. Just left there. The difference between purchasing a bottle of high end whiskey at the distillery and at the duty free store at the airport was over 40%. They have a VAT tax system.

The good news is that you can get that tax money back by jumping through a few hoops. But that only applies to tourists. If you move there, you pay.

runawayyyy on July 18, 2014 at 10:21 AM

mbs on July 18, 2014 at 9:54 AM

Ummm, that was my point – tax at “point of sale”. So, if I order some bbq online, to be shipped from Bubba’s BBQ in NC, then I get charged NC tax. If I order “How To BBQ Like Bubba” from Amazon, and it ships from DE, then I get charged DE taxes.

GWB on July 18, 2014 at 10:23 AM

Ummm, that was my point – tax at “point of sale”. So, if I order some bbq online, to be shipped from Bubba’s BBQ in NC, then I get charged NC tax. If I order “How To BBQ Like Bubba” from Amazon, and it ships from DE, then I get charged DE taxes.

GWB on July 18, 2014 at 10:23 AM

LOL, sorry, need more coffee.

mbs on July 18, 2014 at 10:26 AM

More taxes to fund more big government programs. We need to starve the beast, not give it another feast.

This is why it is nonsensical to support marijuana legislation just for more tax revenue. The entire premise the government needs more tax revue should be rejected.

nazo311 on July 18, 2014 at 10:34 AM

So…wait. Was Jazz weeping softly to himself as he typed this up i ClarisWorks? Since Jazz is such a big advocate of a “fair” tax, which such a “fair” name like “Marketplace Fairness Act”. If a moratorium on a tax on internet access fees (as if Comcast needs more customers furious right now… lolololol) passes, wouldnt that be just awful, Jazz?

Jedditelol on July 18, 2014 at 11:09 AM

It is physically impossible for any State to enforce it’s out of state sales tax purchase laws. It simply cant be done in any way unless every person in their State self reports Out of State Internet sales which is never going to happen.

Johnnyreb on July 18, 2014 at 9:35 AM

It is even more impossible for internet merchants to collect these taxes: especially with the “destination sourcing” which the MFA people want to force upon everybody.

There is no reasonable way for an internet merchant to know what the tax rate is in his customer’s locale, and no reasonable way for the merchant to remit such a tax to “the proper authority” … or to know who “the proper authority” is!!!

The only reasonable, logically defensible way to assess sales taxes to be collected by merchants is at the point of sale: that is, at the point where the merchant is located. The merchant has no reasonable way to collect “use taxes” for every customer in every location. And the states where customers reside ALREADY have most or all of the information they need to collect “use taxes” directly from the customers via their state income tax returns.

The whining states merely have to (at most) add provisions to distinguish “income saved” from “income spent” on their state returns. This would also eliminate the need to burden brick-and-morter merchants or any other non-government organization with sales tax collection. Elimination of sales tax collection by others outside of government would allow everyone, inside and outside of government, to concentrate on serving their own customers instead of some third party. Such elimination would also allow taxpayers to more easily audit tax revenue and government spending.

The MFA is simply another scheme invented by state and local bureaucrats solely FOR THE CONVENIENCE OF LAZY BUREAUCRATS which pawns their responsibilities off on others. Such a scheme is totally incompatible with the concept of “Government of the people, by the people, and for the people”! And it’s not the merchants’ fault or the Internet’s fault that the states have invented a tax on the sale of goods and services which is growing more impossible to collect every day.

landlines on July 18, 2014 at 12:24 PM

To the Author JAZZ SHAW: It is: “Get ON the stick”
See: http://idioms.thefreedictionary.com/get+on+the+stick

KyserS on July 18, 2014 at 1:03 PM

There is no reasonable way for an internet merchant to know what the tax rate is in his customer’s locale, and no reasonable way for the merchant to remit such a tax to “the proper authority” … or to know who “the proper authority” is!!!

landlines on July 18, 2014 at 12:24 PM

Sorry, but that’s a crock. Yes, it takes some work and manpower, but there certainly is a way. The big companies (brick and mortar ones like Wal-Mart and Target) all use databases that maintain tax requirements by zip code. Yes, it’s a major PITA to handle it all, but it is by no means impossible, since nationwide b&m stores already do it.

(I did some research on this a while back, and the stores have central offices through which all the tax remittances go, even though each store resides in a particular zip code. They pay a crapload of CPAs and lawyers to take care of it.)

GWB on July 18, 2014 at 1:21 PM

The only reasonable, logically defensible way to assess sales taxes to be collected by merchants is at the point of sale: that is, at the point where the merchant is located.

landlines on July 18, 2014 at 12:24 PM

I do agree with this, however.

GWB on July 18, 2014 at 1:22 PM