GOP Governors Push To End Amazon’s Tax Evasion Loophole

Republican governors across the country are pushing the federal government to give them more leeway to raise revenue through online sales taxes. In a letter last week, Iowa Gov. Terry Branstad (R) joined a growing number of governors calling for federal legislation that would close the so-called “Amazon Loophole,” which allows online retailers like Amazon to avoid collecting sales tax from their customers, giving them an unfair advantage over brick-and-mortar shops.

Currently, states cannot require online retailers to collect sales taxes unless the companies have a physical presence in the state. Nearly a dozen Republican governors have asked their state congressional delegations to support legislation addressing this inequity, The Hill reports:

Branstad’s letter of support, obtained exclusively by The Hill, comes not long after another prominent Republican governor, Chris Christie of New Jersey, also urged Congress to get moving on sales tax legislation. […]

Christie and Branstad are among about a dozen GOP governors to back the push for online sales tax legislation. Other state leaders who are on board include Mitch Daniels of Indiana, Paul LePage of Maine and Rick Snyder of Michigan.

Virginia Gov. Bob McDonnell, another Republican, approved legislation in his state earlier this year forcing Amazon to collect sales tax. California’s legislature closed its own loophole in 2011. But states without a physical Amazon presence can’t do the same thing. Amazon has threatened states that it would file lawsuits and even move its offices and warehouses if they took similar actions.

Federal legislation to address the loophole isn’t likely to see much action in Congress, though. The House Judiciary Committee will hold a hearing on it next month, but it is not included among the House GOP majority’s legislative priorities for the year. It is unclear if the legislation would pass even if it did receive a vote, given that many congressional Republicans oppose closing the loophole.