Online Sales-Tax Bill Passes Senate, With An Uncertain Future In The House

As expected, on Monday (May 6) the U.S. Senate passed a bill to let states collect sales taxes from out-of-state online retailers. The 69-27 vote on the Marketplace Fairness Act was also pretty much as expected. But that may be the end of any foregone conclusions as the bill heads into a much less certain future in the House.

One assumption has already gone by the boards: House Speaker John Boehner plans to send the bill to the House Judiciary Committee, instead of the Ways and Means Committee, which would normally handle tax legislation. The Judiciary chairman, Robert Goodlatte, has said he has reservations about the bill, and hasn't yet scheduled any hearings on it.

This isn't the kiss of death, though it might be: In the Senate, the bill spent more than a decade languishing in the Finance Committee, where chairman Max Baucus also said he had reservations about it—and never let it be voted out of committee. But with strong bipartisan support and a large margin of victory in the Senate, the bill at least has some momentum going into the House.

It also has the advantage that landing in the Judiciary committee paints it as a matter of redrawing legal lines rather than a new tax (which is what assignment to Ways and Means would imply).

Ultimately, none of that will matter if the bill doesn't clear two hurdles. First, it has to make it out of committee. If Goodlatte decides to bottle it up, Baucus-style, there's essentially no chance that it will become law.

Second, it has to overcome a sizable amount of opposition once it emerges from committee, particularly among anti-tax House Republicans. That may not be insurmountable, in part because technically online tax collection isn't a new tax, so it wouldn't violate their anti-tax pledges. But there may yet be surprises—after all, for all the anti-tax reputation of Republicans, the two most vigorous opponents of the bill in the Senate were Democrats.

For more:

- See this New York Times story
- See this Reuters story
- See this Bloomberg story

Related stories:

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