Internet Tax Reform Will Help Businesses and Consumers

April 15, 2014

WASHINGTON – (April 15, 2014) To highlight the critical importance of Internet tax reform, Robert Atkinson, President of the Information Technology and Innovation Foundation (ITIF), releases the following statement.
As Tax Day arrives in the United States, Congress is assessing one of the largest proposed tax overhauls ever developed. But while it is important to analyze the merits of the plan developed by House Ways and Means Committee Chairman Dave Camp (R-MI) there are a number of other tax policies that should be updated to address the modern digital economy.
As ITIF has noted, there are multiple tax proposals working their way through Congress that would reduce tax discrimination in the e-commerce and Internet space. Two of the most important are an update of the Internet Tax Freedom Act (ITFA) and the Marketplace Fairness Act of 2013.
The ITFA prohibits taxation of Internet access, multiple taxes on Internet transactions, and discriminatory taxes on online transactions. This moratorium has been essential in promoting the expansion of e-commerce and ensuring a level playing field for Internet businesses. ITIF argues that the moratorium should be made permanent and the grandfather clause should be eliminated to provide a greater level of certainty over future tax policy and end the discriminatory taxes that are still on the books.
The Marketplace Fairness Act would authorize states to require collection of sales and use taxes on goods sold online. Not requiring collection of sales tax for online purchases gives out-of-state online retailers an unfair advantage over brick-and-mortar retailers on “Main Street” and distorts the playing field of the marketplace. 
Regardless of whether taxes are collected at the local, state or federal level, Internet tax policy, as with all tax policy, should reflect what is sold and not how it is sold. These bills will create a taxation framework that better aligns with this goal. They will also better promote the continued development and expansion of the Internet economy, while protecting consumers and businesses alike. We urge Congress to pass both of these important reforms during this legislative session.

WASHINGTON – (April 15, 2014) To highlight the critical importance of Internet tax reform, Robert Atkinson, President of the Information Technology and Innovation Foundation (ITIF), releases the following statement:

"As Tax Day arrives in the United States, Congress is assessing one of the largest proposed tax overhauls ever developed. But while it is important to analyze the merits of the plan developed by House Ways and Means Committee Chairman Dave Camp (R-MI) there are a number of other tax policies that should be updated to address the modern digital economy.

As ITIF has noted, there are multiple tax proposals working their way through Congress that would reduce tax discrimination in the e-commerce and Internet space. Two of the most important are an update of the Internet Tax Freedom Act (ITFA) and the Marketplace Fairness Act of 2013.

The ITFA prohibits taxation of Internet access, multiple taxes on Internet transactions, and discriminatory taxes on online transactions. This moratorium has been essential in promoting the expansion of e-commerce and ensuring a level playing field for Internet businesses. ITIF argues that the moratorium should be made permanent and the grandfather clause should be eliminated to provide a greater level of certainty over future tax policy and end the discriminatory taxes that are still on the books.

The Marketplace Fairness Act would authorize states to require collection of sales and use taxes on goods sold online. Not requiring collection of sales tax for online purchases gives out-of-state online retailers an unfair advantage over brick-and-mortar retailers on “Main Street” and distorts the playing field of the marketplace. 

Regardless of whether taxes are collected at the local, state or federal level, Internet tax policy, as with all tax policy, should reflect what is sold and not how it is sold. These bills will create a taxation framework that better aligns with this goal. They will also better promote the continued development and expansion of the Internet economy, while protecting consumers and businesses alike. We urge Congress to pass both of these important reforms during this legislative session."

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The Information Technology and Innovation Foundation (ITIF) is a non-profit, non-partisan think tank whose mission is to formulate and promote public policies to advance technological innovation and productivity internationally, in Washington, and in the states. Recognizing the vital role of technology in ensuring prosperity, ITIF focuses on innovation, productivity, and digital economy issues. Learn more at www.itif.org.