off the charts
POLICY INSIGHT
BEYOND THE NUMBERS
BEYOND THE NUMBERS
With state revenues still well below pre-recession levels, the last thing states need is new federal restrictions on state and local taxing authority — but that’s exactly what they’d get under several bills before Congress.
I’ve already described one such bill, which would make it much easier for corporations to shelter profits from state corporate income taxes. The latest such bill to be introduced (the Digital Goods and Services Tax Fairness Act) would restrict states’ and localities’ ability to tax downloaded music, movies, and online services like photo storage and payroll processing. Backed by a powerful lobbying coalition that includes the U.S. Chamber of Commerce, Amazon, Verizon, Comcast, and Time Warner, the bill threatens to:
- reduce state and local tax revenues even as states and localities struggle to fund critical services like education, health care, and public safety;
- seriously disrupt fundamental features of state and local sales taxation that extend far beyond the kinds of online goods and services covered by the bill; and
- open up major tax-avoidance opportunities for large multistate corporations selling physical goods online.
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