Treasury Secretary Steven Mnuchin signaled Tuesday that President Trump is open to an across-the-board internet sales tax — an issue that has bedeviled lawmakers for years and one that’s tied to a key case to be heard soon by the U.S. Supreme Court.
Mr. Mnuchin, who last year was noncommittal on the issue, now says there are aspects of a national online sales tax the president “likes a lot,” and that Mr. Trump looked forward to working with lawmakers on the issue.
“I think the president fundamentally supports the idea of some type of sales tax across the board, and we look forward to working with you and others on that,” Mr. Mnuchin told members of the Senate Banking Committee.
Currently, retailers are only required to collect sales taxes in states where they have a substantial physical presence.
Companies with facilities in multiple states or nationwide say that rule, codified by the Supreme Court in 1992, gives an unfair advantage to retailers who chiefly operate online.
The Supreme Court announced earlier this month it will hear a case that could ultimately supersede that earlier ruling, after several retailers, including Wayfair and Overstock.com, successfully challenged a South Dakota law allowing the state to collect taxes on remote companies.
Sen. Jack Reed, a co-sponsor of recent legislation aiming to fix the issue, said he’s hopeful the comments from the administration can help move things forward.
“For years, we’ve been trying to get sort of equal treatment for physical stores and virtual stores,” said Mr. Reed, Rhode Island Democrat.
The legislation, known as the Marketplace Fairness Act, gives states the conditional authority to force remote retailers to collect the local taxes. Consumers technically owe the tax already, but it very often goes uncollected.
The Government Accountability Office estimated last year that state and local governments could gain between $8 billion and $13 billion in revenue in 2017 if they were given the power to require remote sellers to collect the taxes.
Similar legislation passed the then-Democrat-controlled Senate in 2013 only to languish in the GOP-controlled House, where Republicans were wary of granting states additional taxing powers.
But Sen. Mike Rounds, another co-sponsor of the current version, said the intervention from the Supreme Court could give lawmakers a sense of urgency this time around.
Mr. Rounds pointed out that the Supreme Court’s 1992 ruling also said Congress was perhaps better suited to craft new rules and deal with the issue.
“The fact that the Supreme Court has actually agreed to take it up may very well provide impetus to Congress to actually adopt something,” said Mr. Rounds, South Dakota Republican.
Some lawmakers, though, say that while states are free to craft regulations for companies housed within their own borders, Congress shouldn’t give them additional powers to target out-of-state businesses.
Rep. F. James Sensenbrenner Jr., Wisconsin Republican, introduced legislation last year that would essentially codify the 1992 Supreme Court decision and ban states from taxing and regulating remote businesses, saying his bill would reduce overregulation and keep government overreach in check.