Some conservatives groups, led by the Heritage Foundation, have been outspoken opponents of the Marketplace Fairness Act, which would close the “Amazon loophole” and allow states to collect sales taxes on online purchases even when the retailers aren’t based within their borders. But a group of conservative organizations that includes Let Freedom Ring, American Majority, 60 Plus Association, and Americans for Job Security went in the opposite direction and published a letter to Congress on Monday in favor of the law:

Our belief in core conservative values leads our organizations to support S.336, the Marketplace Fairness Act. We ask that you vote in favor of this bill to close a tax loophole that punishes small businesses. […]

The Marketplace Fairness Act is a common-sense solution to the current unequal tax treatment of online retailers and their brick-and-mortar competitors. If this government sanctioned price subsidy was present in any other industry conservatives would uniformly rally for reform, as they have when opposing special treatment for Solyndra and other so-called “green energy” boondoggles.

Importantly, the Marketplace Fairness Act asserts federalism, by returning decision making authority over the collection of state taxes to state legislatures, where it belongs. […]

Although we oppose plans to increase government revenues by raising taxes, we fully support efforts to fairly and uniformly enforce taxes already on the books… Higher compliance with taxes on the book allows for a lower broader tax rate and is a safeguard against higher taxes on other citizens.

On Wednesday, the Alliance for Main Street Fairness ran ads on Politico and The Hill hitting back against Heritage’s position.

The Senate recently passed the bill with a bipartisan vote of but it is expected to face opposition in the House.

Giving states the authority to collect sales tax on online purchases would actually make the tax code slightly more progressive, as many low-income families don’t have access to the internet and therefore can’t take advantage of the ability to purchase goods without paying state sales tax. Meanwhile, states have lost billions of dollars to this tax code loophole at a time when they are grappling with constrained budgets.

Gabriel Gomez, the Republican nominee to fill John Kerry’s open Senate seat in Massachusetts, claimed a $281,500 deduction on his income taxes for promising not to alter the appearance of his historic home. While he identified this “easement” as a donation to a controversial Washington, DC-based organization, he was reportedly already prevented from making any such changes under local historic preservation laws — a move the Internal Revenue Service has identified as a common “tax scam.”

The Boston Globe reported Thursday major alterations to the facade of the the Gomez family’s 112-year old home — assessed in 2012 as valued at more than $2 million — were prohibited under the Cohasset, MA town by-laws, as it falls into the Cohasset Common Historic District. As such, experts told the paper, there was little or no value to his “donation” when he promised the the National Architectural Trust (now the Trust for Architectural Easements) that he would make no major changes to the outside of his home.

In 2005, Gomez claimed the $281,500 income tax deduction, suggesting that agreeing to the easement had reduced the value of his property. Five weeks later, the Globe noted, the Internal Revenue Service identified such tax deductions for valueless easements as one of its “Dirty Dozen” tax “schemes that promise to eliminate taxes or otherwise sound too good to be true.” In a section called “Abuse of Charitable Organizations and Deductions,” the advisory warned:

“A “contribution” of a historic facade easement to a tax-exempt conservation organization is another example. In many cases, local historic preservation laws already prohibit alteration of the home’s facade, making the contributed easement superfluous. Even if the facade could be altered, the deduction claimed for the easement contribution may far exceed the easement’s impact on the value of the property.

A Gomez campaign spokesman told the Globe that Gomez’s easement goes further than the existing zoning laws, in part because homeowners have the right to challenge any rejected requests for alterations in court. He also noted that the IRS did not challenge Gomez’s deduction — as it did in many other cases — but refused to explain how the value of the easement was calculated.

But Dean Zerbe, former senior counsel for then-Senate Finance Committee Chairman Chuck Grassley (R-IA), blasted the deduction as “unconscionable” and mostly for the wealthiest “one percent.” “All this is a tax break shenanigan that all the blue bloods on Beacon Hill and the swells in Georgetown take advantage of,’’ he told the paper, “It is wealthy people playing fast and loose. Nobody is taking tax breaks on mobile homes.’’

On his campaign website, Gomez notes that he “experienced how onerous taxes and excessive regulation are barriers to job creation,” and complains that the federal govenrment “runs at an annual loss.”

But while he personally took advantage of this complicated tax loophole, he claims to want to do away with such provisions. On Monday, Gomez told CNBC’s Lawrence Kudlow that he would support comprehensive tax reform to benefit CEOs. “Absolutely we need to have a comprehensive tax reform. I think we need to start looking at the corporate tax loopholes as well as the personal loopholes… we shouldn’t have a tax code that is thousands of pages long.”

The United States Senate voted Monday evening to pass the Marketplace Fairness Act, bipartisan legislation that would close what is known as the “Amazon loophole” by giving states the authority to collect sales taxes on online purchases even when internet retailers aren’t based within their borders. That loophole gives online sellers an advantage over brick-and-mortar retailers that have to collect sales taxes on most purchases.

The legislation passed 69-27.

The new rules would apply to all retailers with sales exceeding $1 million a year should it pass the House of Representatives, where it is expected to face opposition. Amazon, the largest online retailer, now supports it, but eBay and other online outlets are opposed. eBay sent 40 million emails to its users in April protesting the legislation.

“The contentious debate in the Senate shows that a lot more work needs to be done to get the Internet sales tax issue right, including ensuring that small businesses using the Internet are protected from new burdens that harm their ability to compete and grow,” Brian Bieron, eBay’s Senior Director of Global Public Policy, said in a statement. “eBay will continue to focus on bringing greater balance to the legislation by protecting small businesses with less than $10 million in sales or fewer than 50 employees.”

Despite those concerns, the closure of the loophole will have big benefits for states and taxpayers. States have lost billions of dollars to the loophole at a time when tight budgets have forced them to cut back on education and other programs. Low-income taxpayers, meanwhile, will benefit because closing the loophole will make state sales taxes slightly less regressive. However, raising the exemption, as eBay wants to do, would significantly reduce those benefits, which have been sought by governors, including Republicans, across the country in recent years.

The Senate will likely vote this week on legislation that would close the “Amazon Loophole,” a tax loophole that allows online retailers like Amazon and eBay to avoid collecting sales taxes on most purchases made through the sites. The loophole gives online retailers a major advantage over their offline competitors, since they only have to collect sales taxes in states where they have a physical presence.

The Marketplace Fairness Act, which has bipartisan support in the Senate, would change that, giving states the authority to levy sales taxes on online purchases even when the retailer isn’t based within a state’s borders. Passing the legislation would both remove an unfair advantage for online retailers give cash-strapped states more authority to collect sales taxes. But despite warnings from conservatives that it would represent a “government takeover of the internet” and levy “taxation without representation,” the loophole also makes sales taxes even more regressive, since low-income families often don’t have access to online retailers:

Even apart from the Internet sales tax issue, poorer families pay a larger share of their income in sales taxes than better-off families do because they have to spend almost everything they earn. Tax-free Internet shopping compounds the problem: many low-income families would love to shop online to avoid sales tax but can’t because they don’t own a computer or can’t afford high-speed Internet access.

In addition to placing even more of the burden of sales taxes on low-income families, the inability to collect sales taxes from online retailers costs states billions of dollars, exacerbating the budget problems they have faced since the Great Recession. Those problems have led to substantial spending cuts, most of which are targeted at education, unemployment, transportation, and other programs that help low- and middle-income families, meaning the loss of revenue from the Amazon loophole (which Amazon now supports closing) gives an unnecessary advantage to some businesses while hurting the most vulnerable Americans in multiple ways.

Thoughout debates over reducing the nation’s deficit, President Obama has proposed the closure of certain tax loopholes as a way to raise new revenue. The carried interest loophole, which lets wealthy hedge fund managers pay a lower tax rate on certain income, has been chief among the loopholes Obama wants to close, and with the debate over federal spending accelerating yet again, Obama renewed his call to close the loophole in a pre-Super Bowl interview with CBS:

OBAMA: There is no doubt we need more revenue coupled with smart spending reductions in order to bring down our deficit. And we can do it in a gradual way so it doesn’t have a huge impact. And as I said, when you look at some of these deductions that certain folks are able to take advantage of, the average person can’t take advantage of them. The average person doesn’t have access to Cayman Island accounts, the average person doesn’t have access to carried interest income where they end up paying a much lower rate on billions of dollars that they’ve earned. And so we just want to make sure that the whole system is fair, that it’s transparent, and that we’re reducing our deficit in a way that doesn’t hamper growth, reduce the kinds of strategies that we need in order to make sure that we’re creating good jobs and a strong middle class.

The carried interest loophole is one that benefits a small number of hedge fund and private equity managers, who collect income via management fees and by taking a cut of their investors’ profits. The loophole allows the portion of income they make from investors’ profits to be treated as capital gains income, which is taxed at a lower rate than ordinary income. By reducing the amount they collect in management fees and instead taking the majority of their earnings from profits, the managers are able to substantially reduce the amount of taxes they pay on that income.

Proponents of the loophole argue that carried interest, like capital gains, should receive a preference because it is a return on investment income. But as the Center for American Progress’ Seth Hanlon and Gadi Dechter explained, carried interest is “derived from the labor and skill involved in managing other people’s investments,” and as such, it should be treated as ordinary income.

That results in a major loss of revenue for the United States. The Congressional Budget Office estimates that closing the carried interest loophole would generate $21 billion over the next decade.

With debate in Washington focused on the taxes paid by the wealthiest Americans, new data from the Internal Revenue Service shows that the effective tax rates for America’s top earners fell even lower in 2010.

The average effective tax rate fell for all income groups above $500,000, continuing a drop that has occurred for years. For incomes above $10 million, the average rate fell from 22.4 percent in 2009 to 20.7 percent in 2010. The reason for the continual drop is clear: the 2003 high-income Bush tax cuts lowered the rate on investment income, and wealthy Americans are deriving more income from investments than they ever have, the Wall Street Journal reports:

The reason for the drop in average tax rates is no secret: It’s the special 15% top rates for capital gains and dividends that President George W. Bush pushed through. In 2009, taxpayers with incomes exceeding $10 million reported 35.8% of their income as capital gains and dividends. That rose to 48.5% for 2010.

Low capital gains rates have helped the wealthy pay lower and lower tax rates even as their incomes have skyrocketed. And while capital gains income makes up almost half of the incomes of the wealthiest Americans, it accounts for 2.2 percent or less for earners under $200,000. Half of all capital gains income goes to just to the richest 0.1 percent of Americans.

The capital gains rate has been steadily eroded since President Ronald Reagan taxed such income equal to wages in the 1980s, and the result has been rising income inequality. A January 2012 study found that low capital gains rates were the biggest driver of American income inequality, which now rivals the levels seen in countries like Ivory Coast and Pakistan. In 2010, the capital gains preference helped the richest 1 percent capture 93 percent of all income gains.

In a congressional hearing Thursday, Continental Resources CEO and Mitt Romney’s chief energy adviser Harold Hamm asked to preserve the oil industry’s billions in tax breaks, although his company pays little in federal taxes. The oil firm has earned more than $1.8 billion profit over five years by dominating the oil shale boom in North Dakota.

In his prepared testimony, Hamm defends tax breaks by pointing to his own company, saying, “Continental’s effective tax rate is 38%!” But according to Citizens for Tax Justice, Continental paid an average 2.2 percent tax rate, or $40 million, over five years.

Hamm claims a higher tax rate by including deferred taxes the company hasn’t paid. It’s a popular tactic, used by oil companies and the American Petroleum Institute. CTJ shows that Continental Resources has paid federal income taxes as low as 0.1 percent in the last five years:

While oil executives complain that they are “the highest taxed industry,” in reality, the two most profitable oil corporations pay less taxes than the average American. Hamm stands to financially benefit from Romney’s policies, which preserves tax breaks for oil companies and may even allow drilling in national parks.

2012 GOP presidential nominee Mitt Romney will hit the fundraising circuit in Texas tomorrow, attending a fundraiser in San Antonio hosted by billionaire Billy Joe McCombs. Likely not on the table for discussion, though, is the fact that McCombs was ordered by the IRS to pay $44.7 million after using a scheme meant to avoid capital gains taxes:

McCombs is contesting the IRS’ assertion that he should have reported $213.4 million in long-term capital gains in 2002 from the sale of 11.3 million shares of Clear Channel Communications Inc., the company he cofounded in 1972. He’s also disputing an additional $3.3 million in 2003 capital gains in connection with the same purported sale. In all, the IRS asserts, McCombs had $245 million in taxable income for 2002 and 2003, rather than the $18 million he reported and owed $53 million in income tax, not the $8 million he paid.

The case involves a complicated strategy, which was widely peddled by Wall Street as a way for rich folks like [billionaire Phil] Anschutz and McCombs to raise cash from highly appreciated stock positions, while deferring capital gains tax.

In the last few years, the IRS has attempted to crack down on these schemes, much to the chagrin of the billionaires who use them. McCombs settled his case last year.