State And Local Officials Lobby Congress To Construct Online Sales Tax

State and local governments are pushing Congress to take action on a national system for taxing online sales.
by | September 29, 2011
 

States have set their eyes on online sales taxes as a new means of generating income, Reuters reports, but a national framework for such a tax policy would require action by Congress.

The issue has gained national attention since California began negotiating with Amazon.com to charge a sales tax on purchases from that state. California has a $25 billion budget deficit, and at least one study estimates that the state is missing out on more than a billion dollars in income from uncollected online sales taxes.

Most economists project that online sales will continue to grab a bigger share of the overall market. Goldman Sachs, for example, estimates online shopping will jump from less than a 10 percent share to more than 17 percent by 2020, according to Reuters.

But, the news agency reports, a 20-year-old Supreme Court decision mandates that any nationwide tax policy on remote sales must come from Congress. Given the present political climate, experts don't appear optimistic that any kind of compromise could be reached to institute an online sales tax.

Still, various advocacy groups are making a push, according to Reuters, selling the policy as closing a loophole rather than instituting a new tax.

"Most cities are just hanging on, trying to keep the firefighters and police on the street. This is one way Congress can help local governments without it costing them anything," Oklahoma City Mayor Mick Cornett, who has lobbied federal lawmakers to take action, told Reuters.

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