Sen. Ron Wyden, D-Ore., said Wednesday he plans to introduce legislation with Sen. John Thune, R-S.D., that would block state and local taxes on digital goods such as music or software downloads if there is no similar tax on similar physical goods, such as CDs.
Wyden may introduce the bill as soon as tomorrow that would ban "multiple and discriminatory" taxes on goods delivered electronically. Similar legislation was introduced in the House in the last Congress by former Rep. Rick Boucher, D-Va., the former chairman of the Energy and Commerce Communications Subcommittee.
Wyden has a track record on Internet tax issues. He helped write a law that bans the imposition of multiple or discriminatory taxes on Internet access.
Wyden said he has a similar approach with his new legislation. "I only wanted one thing: that is that activity online would not be discriminated against relative to offline activity," he said.
The legislation would not impact the efforts of states and some retailers to require online retailers like Amazon to collect sales taxes from customers in states where those companies don't have a physical presence, a Wyden aide said.
As a result of a 1992 Supreme Court decision, companies are not required to collect sales taxes from customers in states where they do not have a physical presence. Senate Majority Whip Dick Durbin is working on legislation that would authorize states to require online companies to collect sales taxes on remote sales. When asked about the issue, Wyden said he is open to the idea, but argued that state and local governments have not done enough to simplify their sales tax regimes.
Wyden said he also is working on legislation that he plans to introduce soon that would establish binding principles barring discrimination against the Internet for trade purposes.
Through his Finance subcommittee, Wyden said he has been pushing the Obama administration to pursue trade rules that would ensure the free flow of data over the Internet. In addition to filtering Internet content for political purposes, many countries are increasingly engaging in protectionist behavior on the Internet that discriminates against U.S. goods and services, he said.
"We ought to look at the Internet in a different way in the international trade space," Wyden said. "I think the Internet is going to be the shipping lanes of the 21st century."
During a speech later in the day, Rep. Zoe Lofgren, D-Calif., voiced optimism about the prospects of moving legislation she has introduced that would impose a five-year freeze on state and local taxes on wireless phone service. Wyden has introduced a similar bill in the Senate.
She noted that House Judiciary Chairman Lamar Smith, R-Texas, is supportive of the measure, which has been referred to his committee. A House Judiciary subcommittee held a hearing on the bill last month.
Lofgren, a senior member of the House Judiciary Committee, and other supporters note that some states impose taxes as high as 23 percent on wireless phone service.
"Local governments don't like it. I was in local government for 14 years, I also know given the [state] budget system, if you can tax it, you will, which is why you have sin-level taxes on wireless access," she said.