Anti-tax hardliners like Grover Norquist and the Heritage Foundation are seeing their power over congressional Republicans take another hit thanks to the bill that would close the loophole that allows online businesses to not collect sales tax on many transactions, undercutting the prices of brick-and-mortar stores. Norquist and Heritage are, unsurprisingly, opposed to the Marketplace Fairness Act even though it doesn't create any new taxes, just makes it more likely that existing ones will be collected. But it has passed a series of Senate votes with a last vote coming soon, and it seems as though House opposition may be softening
“I have some concern about the legislation,” said Representative Bob Goodlatte of Virginia, chairman of the House Judiciary Committee, which has jurisdiction on the issue, “but we also recognize the fairness issue—certain items being taxed in certain circumstances, other items being not—is a problem for brick-and-mortar businesses, so we’re going to try and solve that.”
Norquist and Heritage have marshaled their usual array of threats and talking points against the bill, but somehow ploys like calling it the "Let People in Alabama Loot People in New York Act" (huh?) aren't working so well this time and may contribute to a backlash.
“I have a lot of constituents saying to me, ‘Grover Norquist did not elect you,’ ” said Representative Steve Womack, Republican of Arkansas and the author of the Internet tax bill in the House. “Members that come to Washington and kowtow to special interests end up contributing to this very polarized government. These are tough decisions we have to make up here.”
Since the Senate bill exempts businesses with less than $1 million in annual sales, it's hard to paint it as hurting small business (not that that stops opponents from trying). Another key talking point is that it puts "fairly rigorous and onerous requirements on online businesses to collect taxes for other states." But since states would have to provide free software to calculate the taxes, that argument too isn't the killing blow Heritage and Norquist want it to be. Not when Republican legislators are hearing stories about businesses in their districts like the one recounted by Missouri Sen. Roy Blunt, who described a local bridal store where people tried on dresses only to order them online, saving themselves the sales tax. "They use the parking lot. They use the sidewalk. They benefit from police protection, and then the local merchant who pays for all of that doesn’t get the sale." As a recognition that government spending is important it's not quite "you didn't build that," but it's got to be scary for Norquist and Heritage to hear a Republican saying nonetheless.