The electronic marketplace of products, goods and services is becoming a bonanza for millions of American consumers and businesses, and to now subject the Internet to a crazy quilt of inconsistent, local and state taxes would have a chilling effect on the growth of that marketplace.  The Internet will be the business infrastructure of the 21st Century, and to subject it to as many as 30,000 taxing jurisdictions applying different rules of taxation would be a mistake.  The American taxpayer has made it clear of late how they regard the IRS.  Just think of the prospect of 1,000s of mini-IRS taxing authorities collecting Internet taxes.

Several questions have been raised about this bill by state and local taxing authorities.  The sponsors have made more than 20 changes since this bill was introduced to specifically address state concerns.  For example, Section 3 of the bill specifically protects the right of localities and states to collect sales, use or other transaction taxes, gross or net income  taxes, value added, net worth and capital stock taxes, fairly apportioned business license taxes, taxes on Internet access providers when they are consumers of the services, property taxes, telecommunications taxes and franchise fees.

But the fact remains, both the U.S. Constitution and the U.S. Supreme Court recognize there are certain limits on a state’s ability to impose tax collection obligations on out-of-state sellers.  And if there ever was something that should be dealt with as a matter of interstate commerce, it is certainly the Internet that transcends state lines and operates independently of state boundaries.

Just think what it would mean for a small business trying to figure out which taxes to collect and then having to hire a hoard of employees to go out and collect them.

The bottom line is that the Internet Tax Freedom Act imposes a moratorium only on taxes that are not technologically neutral.  This means that if a state has a three percent sales tax that a customer must pay the state when walking into a store and purchasing a product, then the state can only charge a three percent sales tax on goods ordered over the Internet.

This bill is going to be good for small businesses on Main Street America.  In point of fact, the Interenet will be another Main Street for small business.  Right now, the small hardware store on Main Street can’t afford a huge advertising budget to compete with the big chains -- this bill will let them get the word out about their products on the Net.  When this legislation passes, a small business won’t have to hire a big accounting firm to figure out its various tax liabilities.  That’s why retailers and small business groups that dominate the Main Street economy have all endorsed this legislation.

It’s time to ensure parity between regular and online commerce, and between transactions on the Net and regular business transactions.  Every business in American still has to pay its share of taxes under this bill.  I urge its support.