Sen. Lamar Alexander, R-Tenn., sent a room full of small retail shop owners Wednesday on a mission: Persuade 15 GOP senators to vote for his Internet sales tax legislation.
That's the number he and other bill supporters say is needed to get Senate Majority Leader Harry Reid, D-Nev,. to bring the legislation to the Senate floor.
"If we do that, he will bring it to the floor and it will pass the Senate. So it's not complicated," Alexander told members of the Alliance for Main Street Fairness at an early morning Capitol Hill event. They are in Washington to help rally support in Congress for legislation to address a two-decade old Supreme Court decision saying states can't force retailers to collect sales taxes from customers who live in states where those companies don't have a physical presence.
Alexander is one of the main co-sponsors of the bill with Sen. Mike Enzi, R-Wyo., and Senate Majority Whip Dick Durbin, D-Ill., that would authorize states that meet certain criteria to require online retailers to collect sales taxes from out-of-state customers.
Many brick-and-mortar retailers complain that they are losing business to Internet retailers who can offer their products at a discount because, in many cases, they don't have to collect sales taxes. States argue they are losing billions of dollars a year in uncollected taxes from Internet sales, a problem they say will get worse with the growth in e-commerce.
For John Raney, a Texas GOP state representative and owner of the Texas Aggieland Bookstore in College Station, it's "a matter of life and death to small retailers." His bookstore caters to students from Texas A&M University. He says the 8.25 percent sales tax he is required to collect puts him at a significant disadvantage compared to online retailers, particularly for the priciest textbooks.
The Enzi-Durbin-Alexander bill is supported by many retail groups including the Retail Industry Leaders Association, which represents big box stores like Best Buy and Wal-Mart, as well as Amazon, one of the biggest players in the online retail space.
On the other side are eBay and Overstock.com, which argue that the bill would impose a tax on Internet sales and would hurt small businesses that operate on the Internet. If the bill advances, eBay says lawmakers should exempt small businesses.
Rep. Steve Womack, R-Ark., who has introduced a House bill similar to the Senate measure, with Rep. Jackie Speier, D-Calif., agrees that supporters must dispel claims that the bill would impose a tax on the Internet. He and others note that the measure would not authorize a new tax but give states a way to collect sales taxes they are already owed. "We need to get through the fog," said Womack, who urged the coalition to target GOP members of the House Judiciary Committee. The panel held a hearing on the issue last year but has not marked up Womack's bill.
Even with the coalition's lobbying push, both the House and Senate bills face long odds of passing before this fall's election. Some supporters acknowledge that the issue may have to wait until next year or possibly for a lame duck session following November's election.
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