Why an Internet sales tax is all wrong for our economy and our country

Comprehensive tax reform would be a wonderful thing – something agreed upon, at least in theory, by both the Republican Congress and the Obama administration – but there is little realistic hope that it will come to pass anytime soon in the poisonous atmosphere of today’s Washington. 

What our leaders can do, however, is to agree on smaller steps that will ease the tax burden on American consumers, workers, and employers as well as stimulate greater economic growth period. Some of these ideas have already generated bipartisan support.  We don’t have to change the whole system to make progress.

In the technology and the Internet sector, there are plenty of areas where Congress can do right by their constituents.  Permanently authorizing the overwhelmingly bipartisan and soon-to-expire Internet Tax Freedom Act would help keep Web access affordable for families, students, and entrepreneurs. Barring states from imposing taxes on broadband access would directly benefit users, especially those in lower-income brackets for whom the Internet is a crucial avenue to education, opportunity, and upward mobility.

Keeping tax off the Internet is a clear example of a strategy that is open to bipartisan support. It is backed by many Republicans, but was originally endorsed by President Clinton during his second term.

Along these lines, consumers would also be grateful  to Congress if it dropped the laughably entitled the Marketplace Fairness Act, an ill-conceived proposal that would allow states to charge sales tax on Internet purchases their residents make outside state boundaries.  That’s a not only a dangerous precedent in the expansion of taxing authority; it would bury smaller Internet sellers under a mountain of red tape and compliance costs, while increasing the price of online purchases. An Internet sales tax could put the brakes on one of the fastest growing segments of our economy.

Incidentally, keeping tax off the Internet is a clear example of a strategy that is open to bipartisan support.  It is backed by many Republicans, but was originally endorsed by President Clinton during his second term.

The Digital Goods and Services Tax Fairness Act also addresses taxes paid on Internet purchases, specifically digital downloads.  This bill would standardize the chaotic layers of tax that currently surround the downloading of songs and movies, ensuring that only the buyer’s home state could tax the transaction. The bill would restore order and fairness, and remove a needless government barrier to economic growth.

Repealing the ObamaCare medical device tax already has strong bipartisan support in Congress.  Taxing medical devices slashes R&D funding, drives companies offshore, increases the cost of healthcare, and puts at risk the discovery of breakthrough medical technologies.

For our seniors, Congress should also abandon the senseless mandate that penalizes people if they don’t start taking annual distributions from their 401K plans at 70.5 years of age. Wage earners should have the power to decide what to do with their retirement savings, not the government. Keeping more money in 401Ks would not only benefit savers, but also make more funding available for investment and business expansions.

Addressing the business part of the tax code such as slashing our corporate tax rate, which is the highest in the developed world; removing self –defeating barriers for American companies to bring home profits earned overseas; full expensing for capital expenditures would be fantastic. But those items may be too much to get President Obama on board.

Let’s immediately push what is now feasible as these micro changes enjoy popular backing. They are merely practical, commonsense policy changes that will protect consumers, support economic growth, and enhance U.S. competitiveness.  If Congress approves them and they meet with White House vetoes, the American people would graphically see new examples of how rapacious and destructive Big Government has become under Barack Obama.