In his latest podcast, president of Americans for Tax Reform, Grover Norquist, discusses how politicians view the unregulated free market of the Internet as an opportunity to impose new taxes on digital goods and services. Taking a look at bills making their way through Congress, Norquist looks at the implications these bills would have on the taxation of Internet services.
On Wednesday, there will be a full House Judiciary Committee markup on three bills that are vital to maintaining federalism and competition among the states. Without the passage of these three bills we are at an even greater risk of facing the perils of not only the IRS, but every state revenue department in the country.
The Digital Goods and Services Tax Fairness Act, adds a level of clarity when an activity falls outside of the traditional physical presence standard and could result in a product or service being taxed discriminatorily or by multiple states. This legislation will ensure that when a digital product is purchased, it is taxed once and only once. It takes the guesswork out of which state might tax what and how by sourcing the tax to the consumer’s billing address.
The Mobile Workforce State Income Tax Simplification Act establishes a clear physical presence standard for employees engaged in cross-border work by keeping states from taxing most nonresident employees unless the employee is present and working in the state for more than 30 days during the year. This allows workers to work more efficiently with fewer hurdles, and keep more of their own paycheck.
The Business Activity Tax Simplification Act establishes a clear physical presence standard for taxing multistate businesses engaged in cross-border transactions. The bill will help to foster inter-state economic activity by eliminating the burden for businesses of having to comply with varying and complex state income tax laws.