Congress is considering legislation that would permit states to impose a tax on internet retailers based out of state, closing the so-called “Amazon Loophole,” which allows online stores 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.
More than a dozen Republican governors and Congressional lawmakers support the measure, including Govs. Chris Christie (NJ) and Mitch Daniels (IN). But one prominent Tea Party senator is raising concerns, arguing that the bill could lead to federal control of the Internet. During an interview with WMAL Wednesday morning, Sen. Jim DeMint (R-SC) warned that supporters of the tax proposal are naive in not seeing the looming takeover:
DeMINT: To involve the federal government, particularly in something that’s working as well as the Internet and particularly when it involves the collection of taxes and telling one state what it has to do for another. I just think given what’s happening here at the federal level now — the takeover of health care, the banking business. People would be very naive to not think that we would end up in a few years with the federal government running the Internet.
The bill would impose a sales tax of five-to-ten percent and could raise as much as $23 billion in additional revenue for cash-strapped states.