Freshman Sen. Ted Cruz, emerging as a leading voice of Capitol Hill conservatives, said Monday that it is “incomprehensible” that the Senate is close to passing a bill that would require booming Internet retailers to collect state sales taxes, warning that the move will kill jobs and hurt the economy.
Mr. Cruz, a Texas Republican and tea party favorite, called the Internet a “thriving ecosystem” that has allowed new businesses to “compete in the national marketplace in ways that would have been impossible 15 years ago, and it empowers consumer choice.”
“But tax-hungry politicians view the Internet as yet another source of revenue to bail out their big-spending governments,” Mr. Cruz wrote in an op-ed article for Real Clear Politics. “The misleadingly titled ‘Marketplace Fairness Act’ is a job-killing tax hike, plain and simple. It is, in effect, a national Internet sales tax, which would hammer the little guy and benefit giant corporations.”
Mr. Cruz also released a new Web spot that warns that the proposal would force businesses to collect taxes for 9,600 jurisdictions and politicians in jurisdictions headed by the likes of Chicago Mayor Rahm Emanuel, New York Gov. Andrew Cuomo, California Gov. Jerry Brown and New York Mayor Michael R. Bloomberg.
“Even if they don’t represent you,” the ad says. “You will collect their taxes!”
But the proposal — co-sponsored by Sen. Michael B. Enzi, Wyoming Republican, and supported by the Obama administration — appears to be moving toward passage in the Senate, where it cleared its final procedural hurdle last month.
The bill could be passed out of the upper chamber as early as Monday. It would then need to pass through the GOP-controlled House and on to President Obama, who has said he would sign it into law.
The tax would require retailers such as eBay to charge consumers for taxes on Web purchases that they technically already owe but that in practice have not been collected. Roughly $23 billion in sales taxes, mostly from online purchases, went uncollected across the country in 2012, according to the National Conference of State Legislatures.
That included about $72.5 million in the District of Columbia, $376 million in Maryland and $423 million in Virginia — money that the Senate bill could help capture in the future.
Internet retailers oppose the proposal because it will wipe away the advantage they hold over their brick-and-mortar rivals, which are subject to state sales taxes. Some say the proposal will help local retailers compete with the likes of Amazon and iTunes.
Mr. Cruz, though, said the measure would “drive smaller competitors off the Internet and out of business.”
“Raising the tax burden on small businesses in one of the still-thriving sectors of our economy doesn’t make sense,” Mr. Cruz said. “And, imposing a national Internet sales tax while the nation is still trying desperately to create jobs and provide new opportunities for millions of Americans still struggling to find work is economic foolishness.”