OVERNIGHT MONEY: Online sales tax bill gets boost

Under current law, states can only collect sales taxes from retailers with a physical presence. Consumers using the Internet to buy goods are supposed to declare the purchases on their tax forms, although few follow through. Some online businesses have begun to voluntarily add the state taxes. 

{mosads}The Supreme Court ruled more than two decades ago that companies only have to collect from in-state customers, but also said that Congress could weigh in on the issue.

Retail groups have long supported the issue and put their weight behind the measure, propelling it to this point. 

Supporters say that the proposal could give billions in extra revenue to struggling state and local governments. The bill would also exempt small businesses with less than $1 million in out-of-state sales.

Senate Majority Whip Dick Durbin (D-Ill.), who has been pressing for passage of the bill for at least two years, said the bill is needed to help states refill their coffers depleted by a lingering economic downturn. 

“What it means is a lot of money for the states and localities,”  he said. 

Still, Sen. Ron Wyden (D-Ore.) said Monday that the online sales tax bill would create a new tax and leads America down a “dark path.”

Supporters’ efforts were revived by a vote last month on the Senate’s budget proposal in which 75 senators voted in support of the plan, giving them the go-ahead to press for a quick resolution of the bipartisan bill. 

Senate Majority Leader Harry Reid (D-Nev.) announced last week he planned to bring the bill straight to the floor, bypassing the Senate Finance Committee and setting the stage for a vote.

That move has disappointed Senate Finance Committee Chairman Max Baucus (D-Mont.) and the panel’s ranking Republican, Sen. Orrin Hatch (Utah), who have expressed opposition to the legislation.

Some conservative groups like Americans for Tax Reform and Heritage Action have also slammed the bill, saying it is unfair to businesses that don’t use services in those states. 

Still, several leading GOP governors, who have to balance their budgets each year, have endorsed the proposal.

Online auction site eBay is emailing millions of its users, urging them to fight legislation.

In an email to the site’s sellers, eBay CEO John Donahoe wrote that the bill would “penalize small online businesses.”

Meanwhile, Wall Street groups on Monday urged Congress to slow down work on an online sales tax bill, warning the legislation might allow states to begin taxing stock trades. 

The Securities and Financial Markets Association and the Financial Services Roundtable said the “impact of this legislation on trade in services has not been adequately explored by Congress.” 

WHAT ELSE WE’RE WATCHING 

Consumer chat: Consumer Financial Protection Bureau Richard Cordray is back before the Senate Banking Committee on Tuesday, and if you get a sense of déjà vu, we wouldn’t blame you. Cordray’s appearances on Capitol Hill always attract attention, but lately the drama has seemed more and more like a rerun. 

Republicans are continuing to block Cordray’s nomination to stay on the job past the end of the year, but insist it is not because they object to the job his has done or his nomination, per se. Rather, they’re insistent on making structural changes to the bureau, including replacing the director with a bipartisan commission. Democrats insist the changes are a non-starter and refuse to consider them, while they tout the job Cordray and the CFPB have done for consumers. 

Meanwhile, Cordray tries his best to keep his head down and highlight all the work the bureau has been up to in the meantime, and wait for the logjam to break one way or another. Expect more of the same tomorrow.

In his written testimony, Cordray mentions the bureau’s work on student loans, debt collectors and credit reporting. He also mentions the hundreds of millions it has assessed against credit card companies for misleading consumers.

“Born out of the worst financial crisis since the Great Depression, the Consumer Bureau is the nation’s first federal agency whose sole focus is protecting consumers in the financial marketplace,” he is expected to say. “We are dedicated to improving the lives of everyday Americans and to restoring trust in consumer financial markets.”

In related news, the chairman of the House Financial Services Committee is refusing to hear testimony from Cordray, arguing that his current appointment to the position is legally invalid.

Chairman Jeb Hensarling (R-Texas) contends Cordray reached the position via unconstitutional means and is not the legitimate director of the agency.

Vets budget: On Tuesday the Senate Budget Committee will discuss what President Obama’s 2014 budget request could mean for veterans, hearing testimony from Eric Shinseki, secretary of the Department of Veterans Affairs. In addition to questioning Shinseki about the agency’s efforts to provide the care and benefits our veterans have earned, panel Chairman Patty Murray (D-Wash.) is expected to talk about his recent announcement to reduce the benefit claims backlog.

Chatting with Fish: The Senate Finance Committee will discuss the state of child welfare and will hear from Antwone Fisher, an author, director and film producer who was abused during his time in the foster care system. The committee also will chat with other experts on the issue.

USAID budget: A Senate Appropriations subcommittee with chat with USAID Administrator Rajiv Shah about budget estimates for the 2014 budget.

ECONOMIC INDICATORS

Housing Price Index: The Federal Housing Finance Agency will release its measure of prices for February on single-family homes. With inventory tightening, prices will likely show an increase. 

New Home Sales: The Commerce Department releases its March report on new privately owned single-family houses sold and for sale. New home sales usually have a lagged reaction to changing mortgage rates, which are at historic lows.   

WHAT YOU MIGHT HAVE MISSED

— GOP lawmaker: IRS furloughs a stunt

— Chamber starts year with $10 million in lobbying

— Japan wins support to enter Asia-Pacific trade talks

— IRS overpaid up to $13.6B in low-income tax credits, report finds

— Citi adds former USTR official to international affairs team

— Analysis: Obama budget raises taxes on the middle class

— Former prosecutor picked to lead SEC’s enforcement division

— Former Sen. Bob Kerrey joins government affairs firm

— Short supply hampers home sales in March

Catch us on Twitter: @VickoftheHill, @peteschroeder, @elwasson and @berniebecker3

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