Internet Sales Taxes: Just in Time for Christmas?

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


A U.S. House committee today is hearing the pros and cons of a bill that would finally allow states to collect sales taxes on stuff bought online. The states desperately need the money. Sales taxes account for a third of all state revenue, and the bulk of it goes towards public education, but that tax base is eroding thanks to a proliferation of online sales outlets. One study estimates that by 2008, the states will be losing $33 billion in revenue on “remote” sales, $18 billion of which comes from virtual stores.

Internet retailers have successfully batted down such proposals in the past, arguing that they would infringe on interstate commerce. But the states have gotten smarter and in recent years many have banded together to create uniform tax codes and a voluntary agreement to tax these companies, hoping to get around the constitutional issues. The bill, introduced by Massachusetts congressman William Delahunt, would let those states bound by the agreement tax remote companies.

At the hearing today, the bill got support from retailer J.C. Penny, which has to collect sales taxes on its Internet business because it also has bricks-and-mortar stores in many states. It wants to level the playing field to make it easier to compete with companies that are solely online. Opposing the bill, though, is the Direct Marketing Association, once known as the junk-mail lobby but which now represents catalog sales companies and electronic merchants. Not surprisingly, the DMA is opposed to the legislation, and DMA rep George Isaacson insisted that state legislators have vastly overestimated how much money they’re losing in sales tax revenue. He says the figure is more in the range of $145 million as opposed to the many billions claimed by the state legislators. Still, that’s a nice chunk of change that could put a few new teachers in the classroom without causing too much pain to the general public. No word yet on the bill’s prospects, but no doubt it will create a nice fundraising vehicle for legislators on both sides of the aisle.

TIME IS RUNNING OUT!

We have an ambitious $350,000 online fundraising goal this month and it's truly crunch time: About 15 percent of our yearly online giving usually comes in during the final week of the year, and in "No Cute Headlines or Manipulative BS," we explain why we simply can't afford to come up short right now.

The bottom line: Corporations and powerful people with deep pockets will never sustain the type of journalism Mother Jones exists to do. And advertising or profit-driven ownership groups will never make time-intensive, in-depth reporting viable.

That's why donations big and small make up 74 percent of our budget this year. There is no backup to keep us going, no alternate revenue source, no secret benefactor. If readers don’t donate, we won’t be here. It's that simple.

And if you can help us out with a donation right now, all online gifts will be matched thanks to an incredibly generous matching gift pledge.

payment methods

TIME IS RUNNING OUT!

We have an ambitious $350,000 online fundraising goal this month and it's truly crunch time: About 15 percent of our yearly online giving usually comes in during the final week of the year, and in "No Cute Headlines or Manipulative BS," we explain why we simply can't afford to come up short right now.

The bottom line: Corporations and powerful people with deep pockets will never sustain the type of journalism Mother Jones exists to do. And advertising or profit-driven ownership groups will never make time-intensive, in-depth reporting viable.

That's why donations big and small make up 74 percent of our budget this year. There is no backup to keep us going, no alternate revenue source, no secret benefactor. If readers don’t donate, we won’t be here. It's that simple.

And if you can help us out with a donation right now, all online gifts will be matched thanks to an incredibly generous matching gift pledge.

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