WASHINGTON D.C. — Today, the House Judiciary Subcommittee on Regulatory Reform will hold a hearing on regulatory burdens and sales taxes imposed by states on retailers outside their borders. The hearing will discuss the No Regulation without Representation Act of 2017 (HR 2887), bipartisan legislation that would codify the Supreme Court’s 1992 decision in Quill v. North Dakota, which bars states from taxing retailers that do not have a physical nexus in their state. States would continue to be able to tax sales made by companies with a physical presence in-state.
“Extraterritorial state sales taxes are just one assault on the borderless Internet,” said Berin Szóka, President of TechFreedom. “In 1996, Congress declared that the Internet should remain ‘unfettered by federal and state regulation,’ and banned many Internet taxes in 1998. This approach has allowed interstate e-commerce and competition to flourish, benefitting consumers. But states have never stopped trying to control the Internet, claiming that it’s about lost revenue. Amazon, the go-to boogeyman for cash-starved legislatures, already collects in all 45 states with a statewide sales tax. The burden of onerous taxes and regulations will fall most on Amazon’s third-party vendors and mom-and-pop retailers.”
“This isn’t just about taxes,” continued Szoka. “State efforts to tax outside their borders, and defy Quill, can threaten Internet users’ privacy and data security. Colorado has forced out-of-state retailers to ‘snitch’ and report information to its Department of Revenue whenever a Coloradoan uses the Internet to shop outside their state. Shopping habits can indicate an individual’s health history, financial status, and even political preferences, and government agencies have a poor track record of securing data. Such a database would be a boon to any criminal or foreign hacker.”
We can be reached for comment at firstname.lastname@example.org. See our other work on sales taxes, including:
- Our blog post on Colorado’s “Amazon Tax Law,” which threatens the privacy and data security of Coloradans
- Our in-depth podcast on Internet sales taxes
TechFreedom is a non-profit, non-partisan technology policy think tank. We work to chart a path forward for policymakers towards a bright future where technology enhances freedom, and freedom enhances technology.