Goodlatte: 7 Things to Consider Before Taxing Internet Shopping

James Gattuso /

Rep. Bob Goodlatte (R-VA) (Tom Williams/CQ Roll Call/Newscom)

Rep. Bob Goodlatte (R-VA) (Tom Williams/CQ Roll Call/Newscom)

Efforts in Congress to give state tax collectors power to tax out-of-state (mostly Internet) sales hit a roadblock Wednesday, as House Judiciary Committee chairman Bob Goodlatte (R–VA) released seven principles to guide the debate. These principles reflect the major concerns with such an expansion of taxing power, rightfully setting a high bar to any such action.

However, the bill has stalled in the House, which has been more skeptical. Under current law, as set out by the Supreme Court, state tax collectors cannot require retailers to collect sales taxes for them unless that retailer has a “nexus,” or physical presence, in their state. Legislation to remove this limitation, S. 743, the Marketplace Fairness Act (MFA), was approved by the Senate earlier this year. The House has been skeptical, however. Goodlatte’s principles reflect that skepticism and articulate the many reasons for concern. Among them:

Chairman Goodlatte has been careful to indicate that these principles do not necessarily rule out legislation on Internet taxation. A plan consistent with these principles could still be considered. But so far, no such plan is in sight; certainly the Senate-passed MFA falls far short of the mark. And it’s not clear what, if any, plan would pass muster. But that’s not a legislative failure; it’s the way the system should work.