Today, Americans for Tax Reform condemned legislation introduced in Congress by Sen. Dick Durbin (D-Ill.) and Rep. John Conyers (D-Mich.) that would authorize select states to reach outside their borders to collect tax on Internet, catalog, and other sales. The Main Street Fairness Act would allow Streamlined Sales Tax compliant states to force out-of-state retailers to collect sales tax on residents. The legislation amounts to as much as a $23 billion tax increase at the state level.
At issue is the 1992 U.S. Supreme Court decision Quill Corp. v. North Dakota, which ruled that forcing a company with no physical presence in a state to collect tax is a violation of the Commerce Clause. The Main Street Fairness Act would allow Congress to overturn the Quill case given their authority over interstate commerce.
Grover Norquist, president of Americans for Tax Reform, made the following statement:
"The so-called Main Street Fairness Act is a massive $23 billion Internet tax hike that is dead on arrival for any fiscally responsible lawmaker. The legislation hands a small cartel of state tax administrators the ability to reach across state borders and export the burden of tax collection onto out-of-state businesses.
“This legislation would overturn well-reasoned U.S. Supreme Court precedent that states can’t force businesses and non-residents without a footprint in their state to collect their taxes. Forcing non-residents to collect taxes is a philosophy rooted in high-tax states trying to find new and creative ways to raise taxes as their residents flee oppressive tax and regulatory regimes.
“ATR strongly supports efforts to level the playing field and simplify the tax code, however this bill simply raises billions of dollars in taxes for politicians to spend without leveling the playing field at all. The bill tips the scales in the opposite direction, forcing online and out-of-state retailers to collect tax in thousands of tax jurisdictions across the country, while brick-and-mortar stores continue to collect tax only in the one where they are located.”