Observers suggest that a move to tax online transactions could get a fresh wind if Rep. Jason Chaffetz, R-Utah, is successful in his bid for House leadership.
Chaffetz is the chief author of the Remote Transactions Parity Act, which would force retailers to begin collecting sales taxes. Similar legislation passed the Democratically-controlled Senate in 2013, but has never gained traction in the House.
However, with Rep. Kevin McCarthy, R-Calif., out of the race for House speaker, Chaffetz is one of only two announced candidates running for the post, and that brisk change in dynamics has prompted anti-tax groups to sound the alarm.
Without referencing the race for speaker, Americans for Tax Reform president Grover Norquist sent a letter to lawmakers singling Chaffetz out on Tuesday. “There is a new threat to raise taxes on the Internet,” Norquist asserted. “This battle has been going on for over 20 years, and the threat continues in the Remote Transactions Parity Act introduced by Congressman Jason Chaffetz.”
The “threat” isn’t new. Chaffetz, along with a number of Democrats and a few Republicans, proposed this incarnation of the legislation in June.
Norquist said no more about Chaffetz in the letter. Instead, he concluded by saying that the legislation “undermines tax competition among the states” and offered to speak with legislators who had questions.
However, the point was made: Chaffetz has stepped off the reservation.
Andrew Moylan, executive director of the nonprofit R Street Institute, elaborated on that perspective to the Washington Examiner. “Chaffetz as speaker would likely mean an attempt to advance his Internet sales tax bill, despite strong opposition from the general public and conservative policy groups,” Moylan said.
Moylan pointed to research conducted by the polling firm Mercury that found voters favored candidates in hypothetical matchups who opposed Internet sales taxes, by a margin of 53 percent to 28 percent, as an example of why the legislation hasn’t been successful in Congress. He added that Chaffetz’s proposal “hasn’t moved yet because it violates key principles of [Republican] tax policy, but as speaker he’d have the power to push it through regardless.”
Moylan said he anticipated that a Speaker Chaffetz “would likely sideline Judiciary Committee Chairman Bob Goodlatte, who’s been working on alternative language that doesn’t suffer from the Chaffetz bill’s problems, in order to push his legislation.”
Goodlatte’s proposal would allow retailers to pay the sales tax that their own states impose instead of the tax rate in a customer’s state. Critics note that the Chaffetz proposal would impose 50 different tax rates that businesses would need to track, one for each state.
Another possible candidate for speaker, Rep. Paul Ryan, R-Wis., has expressed support for similar legislation.
