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February 6, 2016

Democratic Leaders Plan to Bypass Wyden on Internet Sales Tax Combo Bill (Video)

Durbin wants to require companies to collect state sales taxes on online transactions. (Bill Clark/CQ Roll Call File Photo)

Durbin wants states to be able to collect sales taxes on online transactions for out-of-state purchases. (Bill Clark/CQ Roll Call File Photo)

Senate Democratic leaders plan to do an end run around Senate Finance Chairman Ron Wyden and combine House-passed legislation extending a moratorium on taxing Internet access with a Senate-passed proposal to require online retailers to collect sales tax.

“I think it’s fair to say the two are going to be together,” Senate Majority Leader Harry Reid, D-Nev., told reporters Wednesday.

The Internet Tax Fairness Act passed the House Tuesday by a voice vote. The Marketplace Fairness Act passed the Senate last year, shepherded by Majority Whip Richard J. Durbin, D-Ill., and Sen. Michael B. Enzi, R-Wyo.

“There is a deadline, Nov. 1,” Durbin said. “The Internet Tax Freedom Act would expire. States and localities would be able to tax the Internet, which is something none of us want to see; I shouldn’t say none of us, most of us don’t want to see that happen.

“So now we have suggested to the sponsors and supporters of that measure that if they join it with Marketplace Fairness that we have might have a great package to get done on time,” Durbin continued.

Durbin said Sen. Lamar Alexander, R-Tenn., “has made it clear that he wouldn’t allow the Internet Tax Freedom bill to go forward unless Marketplace Fairness was joined to it. So I think we have stated our position clearly.”

Alexander said it’s a sound approach, but was unsure of the timing.

“I think that’s a very promising approach,” Alexander said. “I don’t know whether there will be time to do it between now and August or right after we come back,”

Doing so would effectively bypass Wyden.

Wyden also pushed for a permanent fix of the “sustainable growth rate” formula that requires cuts in doctor pay under Medicare, but Democratic leaders ultimately accepted a 13-month patch, which was cleared in March.

And Wyden initially pushed for a Highway Trust Fund patch that would expire at the end of December and force action in the lame duck. But last week he passed through his committee a bipartisan patch that stretches through May of next year. The bill is similar to a House proposal that was backed by President Barack Obama.

Durbin said he hopes to try to win Wyden’s support.

“This issue came up before he was Finance chair and it enjoys broad support within the Democratic caucus and among Republicans,” Durbin said. “So I hope that … we can work with him to find a suitable approach to it. But it’s a critically important issue. My state and 45 others are losing huge amounts of revenue and there are businesses that are failing because of our refusal to take up this measure. So I think we need to roll up our sleeves and get it done.”

For his part Wyden rejected the idea of packaging the two bills together.

“Senator Wyden is committed to seeing the Internet Tax Freedom Act permanently extended, and preventing states from placing discriminatory regulations on the Internet,” a Wyden aide said. “He is working with a number of members who understand that combining ITFA with the Marketplace Fairness Act would only undermine that effort.”

Durbin said even if the package passes the Senate, questions remain in the House where Judiciary Committee Chairman Robert W. Goodlatte, R-Va., doesn’t like the Senate Marketplace Fairness bill.

“The House is always a problem,” Durbin said. “We have tried repeatedly, repeatedly for meetings with House members to talk about finding common ground. They have canceled every meeting. So this is our approach. We want to join Marketplace Fairness with Internet Tax Freedom. I hope we can do that on the floor of the Senate and send it back to the House.”

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