Tax-Free Internet Sales Poised to Become a Thing of the Past

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.


I’ve written once or twice before about Amazon’s scorched-earth policy against being forced to collect state sales taxes, and also about its eventual cave-in to California legislators who demanded that they collect sales taxes whether they wanted to or not. At the time, Amazon’s excuse for fighting over this was its supposed belief in fair play: they took the position that Congress should pass a federal law that sets a single nationwide standard, either exempting everyone from internet sales taxes or requiring everyone to pay. I was unimpressed:

It would actually be nice to have a federal law on this issue. But I sure don’t see how we can get one. States would go ballistic if a federal law upheld the general exemption of internet retailers from collecting sales taxes, and there doesn’t seem to be any path through the Senate for such a bill. On the other hand, the anti-tax jihadists would burst a vein if Congress passed a law that effectively increased taxes by putting e-tailers on a level playing field with brick-and-mortar stores, and the House is controlled by the anti-tax brigade. So there’s deadlock.

But maybe it’s not so impossible after all. In the 1992 Supreme Court decision that prohibited states from forcing companies to collect state sales taxes unless they had a physical presence there, the Court specifically said that its prohibition was based solely on Commerce Clause issues. Thus, “Congress is now free to decide whether, when, and to what extent the States may burden interstate mail-order concerns with a duty to collect use taxes.” For the next two decades, Congress declined to take up this offer, but during that time internet sales grew exponentially and states grew ever more jittery about the amount of tax revenue they were losing. What’s more, Amazon grew big enough that they were having a harder time avoiding state sales taxes, as their 2011 California cave-in demonstrated. Suddenly, instead of opposing a federal law, Amazon supported one. If they had to collect sales taxes, they were better off if everyone else had to collect them as well.

A bill to authorize this has been quietly wending its way through the Senate for the past year or so, and Brad Plumer informs me today that it might be up for a vote as soon as this afternoon. Needless to say, Grover Norquist is opposed, and this has made it hard to get Republican votes. On the other hand, the bill is cosponsored by Sen. Mike Enzi, the fourth most conservative senator in the country and a guy with a 90 percent rating from Norquist’s own lobbying group, Americans for Tax Reform. That’s brought quite a few Republicans into the fold.

Long story short, it turns out that the Senate is indeed poised to pass something useful. How about that? Not quite this afternoon, though: cloture was invoked this afternoon and passed, which means passage of the bill is assured too, but not until it comes up for debate later in the week. Next stop: the House of Representatives, where we’ll find out if Norquist’s grip is tighter than it is in the Senate.

WE'LL BE BLUNT:

We need to start raising significantly more in donations from our online community of readers, especially from those who read Mother Jones regularly but have never decided to pitch in because you figured others always will. We also need long-time and new donors, everyone, to keep showing up for us.

In "It's Not a Crisis. This Is the New Normal," we explain, as matter-of-factly as we can, what exactly our finances look like, how brutal it is to sustain quality journalism right now, what makes Mother Jones different than most of the news out there, and why support from readers is the only thing that keeps us going. Despite the challenges, we're optimistic we can increase the share of online readers who decide to donate—starting with hitting an ambitious $300,000 goal in just three weeks to make sure we can finish our fiscal year break-even in the coming months.

Please learn more about how Mother Jones works and our 47-year history of doing nonprofit journalism that you don't find elsewhere—and help us do it with a donation if you can. We've already cut expenses and hitting our online goal is critical right now.

payment methods

WE'LL BE BLUNT

We need to start raising significantly more in donations from our online community of readers, especially from those who read Mother Jones regularly but have never decided to pitch in because you figured others always will. We also need long-time and new donors, everyone, to keep showing up for us.

In "It's Not a Crisis. This Is the New Normal," we explain, as matter-of-factly as we can, what exactly our finances look like, how brutal it is to sustain quality journalism right now, what makes Mother Jones different than most of the news out there, and why support from readers is the only thing that keeps us going. Despite the challenges, we're optimistic we can increase the share of online readers who decide to donate—starting with hitting an ambitious $300,000 goal in just three weeks to make sure we can finish our fiscal year break-even in the coming months.

Please learn more about how Mother Jones works and our 47-year history of doing nonprofit journalism that you don't find elsewhere—and help us do it with a donation if you can. We've already cut expenses and hitting our online goal is critical right now.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate