May 19, 2000

Dear Senators Gregg and Kohl:

On behalf of the 300,000-member National Taxpayers Union (NTU), I write to offer our endorsement of S. 2401, the New Economy Tax Simplification Act, and urge all Members to work toward its passage.

While the Advisory Commission on Electronic Commerce (ACEC) was a useful tool for highlighting the many deficiencies inherent in Internet taxation, its failure to reach a super-majority consensus on what, if any, legislative actions should be undertaken has transferred this responsibility to Congress. Fortunately for taxpayers and businesses across the country, your bill addresses the complex issue of Internet taxation with a simplicity and fairness that very few other proposals possess.

By clarifying the "nexus" guidelines established under the Supreme Court’s Quill ruling and establishing a clear precedent over what transactions will, and will not, be subject to state taxes, your bill protects the rights of the states and the people. States should not be allowed to force companies without a significant physical presence in their jurisdiction to act as independent tax collectors. Nor should residents of a state be forced to pay another state’s sales taxes. However, S. 2401 would maintain fairness and equity in the tax code by allowing states to require tax collection by companies with a significant presence in their state.

The Internet provides a vast economic opportunity to countless millions of American entrepreneurs and consumers. Government should not be allowed to suffocate this booming industry in order to feed its own greed. Again, the underlying basis for all taxes is fairness. S. 2401 ensures that all Internet tax transactions are treated in an equitable manner that allows for the growth of this vibrant piece of our economy, while reducing complexity and ensuring that all merchants — and taxpayers — are treated equally.

Once again, NTU endorses S. 2401 and urges all Members to work toward its passage.

Sincerely,

Eric V. Schlecht
Director,
Congressional Relations

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