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CNHI News Service Originals

October 24, 2011

Conflicted politics deter sales tax reform

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CORSICANA , Texas —

Advocates for change say the fairness mantra on its own may not be enough to push Congress into action, but it's an argument that helps define the issue and cut through the clutter of complicated legislation.

The Main Street Fairness Act, introduced by Sen. Dick Durbin, D-Ill., doesn't impose a national sales tax, but sets into motion a process to streamline the mess of local and state sales tax rules, making it easier for online retailers to collect and remit the tax.

“We're finally getting Congress's attention,” said Jason Brewer, vice president of the Retail Industry Leaders Association, which has partnered with the Alliance in the push for a federal fix. “We're not asking them to impose a new tax. We're asking them for fairness in how an existing tax is collected.”

That's the theme that resonated in Texas with lawmakers like Cook. The bill he backed was primarily aimed at Amazon. Supporters argued that because Amazon had a distribution warehouse in the state – and therefore a physical presence – it had to start collecting taxes on purchases made by Texans.

The measure passed by a huge margin, but was vetoed by Republican Gov. Rick Perry after Amazon offered Texas a sweet deal to back off. In exchange for a moratorium on sales tax collection, Amazon promised to bring 5,000 jobs to the state and spend $300 million to open distribution centers where those employees would work.

The Texas legislature turned down the deal. Then, in an end-run around Perry, GOP leaders slipped the online sales tax language into a budget bill the governor had to sign.

Online consumer Samantha Katsounas, a sophomore at the University of Texas, wasn’t amused. She penned an editorial decrying the Texas vote as misguided and said it would harm students like her who'd been skirting the sales tax by buying their textbooks from online retailers.

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