Today President of Americans for Tax Reform, Grover Norquist, sent Speaker Paul Ryan, and House Judiciary Chairman, Bob Goodlatte, a letter requesting House leadership to bring the Digital Goods and Services Tax Fairness Act (HR 1643) to the House floor for a vote:
Numerous states have expanded the definition of a good or service through the various departments of revenue or other administrative bodies, bypassing the elected state legislators altogether. There must be a mechanism in place to hold these policymakers accountable to their constituents.
This bill protects American consumers and taxpayers from predatory double taxation measures and holds elected representatives accountable to their constituents.
Over 87% of Americans access the Internet through various media, and over 200 million Internet users made online purchases in 2015.
Because the advancement of technology is progressing faster than reforms to our tax code, the law surround digital goods and services is outdated and leaves the door open to a single transaction being taxed numerous times.
This threatens the economic stability of consumers and businesses across the nation.
States that impose sales tax on online sales, or sales that take place across state borders harm our democracy. These laws create scenarios for consumers, where their purchases of digital goods could be taxed many times.
For example, a customer based in Nebraska, who purchases a digital good from California, where the transaction goes through a server in Wyoming, could be subject to taxation from three different states. There is no precedent for this harmful behavior.
These digital taxes are already appearing across the country at an alarming rate. States like California are levying taxes on streaming services like Netflix. States like New Mexico, Vermont, and South Dakota are also planning such taxes, which will harm consumers in those states.
Thankfully, HR 1643 clarifies the requirement for tax jurisdiction, and eliminates the patchwork of legislation that makes it impossible to navigate the current digital tax code. This bipartisan piece of legislation establishes a road map to ensure that digital goods and services are treated fairly around the country.