The vote on the federal government internet tax proposal

Who do you think is more likely to defend you against the overreach of the federal government? The Republicans in Congress or Oklahoma’s legislators?

Many would say the latter. After all, according to public perception, congressional Republicans don’t have the best reputation for representing the concept of smaller and more limited federal government.

However, for a short time last month, I was afraid that Oklahoma legislators were going to take a stand with Harry Reid and the U.S. Senate Democrats in an effort to pressure congressional Republicans into expanding the role of the federal government as it relates to collecting sales taxes.

Most of us will agree that the federal government should not have a role to play in the area of our sales tax collection policy.

In May of last year, the U.S. Senate approved a new internet sales tax bill known as The Marketplace Fairness Act. Oklahoma Senator Jim Inhofe stated, “The Act first and foremost represents a tax increase, which is why I opposed it. I am also concerned this bill would add layers of red tape and regulations onto online businesses of all sizes, which in turn would hurt consumers, entrepreneurs, and future economic growth.”

Following passage in the Senate, the tax bill proceeded to the U.S. House where House Republicans didn’t seem anxious to take it up. Those who wanted the tax to go forward needed to pressure Republicans into caving.

The advocates for the tax needed the state legislatures to pass their own bills to change state laws to enact the federal proposal even though it has not yet been approved. This may seem like putting the cart before the horse but there is a method to the madness.

Once state-level bills are passed, the lobbyists in DC can lobby for the federal internet tax proposal by pointing to the states which have not only approved the idea but preemptively changed state laws to adopt the idea. What better way to put pressure on Republican congressmen than to point to a red state like Oklahoma as being on board with the proposal?

To this end, with just a month left in the legislative session, a harmless bill originally designed to address a military income tax issue suddenly morphed into a bill to make Oklahoma comply with the federal internet sales tax proposal, even though that proposal hasn’t yet been approved by Congress.

The bill arrived on the floor of the House with just three days remaining in session where it was carried by a top House leadership official. Normally, bills carried by leadership are successful, and I feared that this would be no different. I thought the Legislature would approve the bill and Oklahoma would go on the record as working with Harry Reid and the U.S. Senate Democrats in advocating for the tax, yielding Oklahomans’ sovereignty to other state governments and potentially forcing Oklahoma’s small business owners to face the liability of an audit from the 45 other states which collect a sales tax.

Fortunately, a coalition of 59 of us formed in opposition to the bill in what I believe to be one of the most important votes of the session, and the bill was defeated.

We won this battle, but the war will likely be ongoing far into the future as both state and federal governments try to increase tax collection authority.

Thank you for reading this article. Your interest and input are much appreciated. Please do not hesitate to email Jason.Murphey@hd31.org with your thoughts and suggestions.