KOHL, GREGG INTRODUCE "NEW ECONOMY TAX FAIRNESS ACT" FOR INTERNET SALES

WASHINGTON -- U.S. Senators Judd Gregg (R-NH) and Herb Kohl (D-WI) today introduced the "New Economy Tax Fairness Act" to prevent businesses from being forced to collect sales taxes on goods sold via the Internet in states in which they have no physical presence. The legislation codifies a Supreme Court ruling that States cannot force out-of-state mail order firms to collect sales taxes, claiming that to do so would be an unconstitutional burden on interstate commerce. The Court ruled that only through an act of Congress could mail order companies be compelled to collect sales taxes for goods sold in every state. The direct marketing industry impacts 300,000 jobs in Wisconsin, including mail order companies and shippers.

"If a business is located in a state -- uses the roads there, impacts the environment there, employs local workers there -- it should pay taxes and business fees there, and it should collect sales taxes on products sold there. But if a business is located out of state, and simply ships products to consumers there, it is not part of the local economy. It does not use local services or infrastructure. And it should not be subject to the taxes and tax collection burdens that support a community not its own," Kohl said.

Kohl was an opponent of earlier legislation to force mail order companies to collect sales taxes for goods sold in every state on the grounds that it would amount to raising taxes; it would create significant red tape burdens on mail order companies; and it would cripple the direct marketing business and stagnate future retail growth through the Internet. If all companies were required to collect sales tax in all states in which they sell, they would be responsible for complying with 7,600 tax jurisdictions and 46 sets of rules, all with unique exemptions and filing requirements.

"In Wisconsin, for example, we have many cheese makers who run small family businesses. A quick search on the World Wide Web yields twenty Wisconsin cheese makers selling over the Internet. They are from Wisconsin towns like Plain, Durand, Fennimore, Tribe Lake, Thorp, and Prairie Ridge. Could these small towns support speciality cheese makers with walk-in traffic only? Would these small businesses continue to sell over the Internet if they had to figure and remit sales taxes and business fees to the over 7000 taxing jurisdictions into which they might ship? Of course not," Kohl said.