Support S. 3581 & H.R. 7058 the “Digital Goods and Services Tax Fairness Act of 2018”
Dear Majority Leader McConnell, Minority Leader Schumer, Speaker Ryan, and Democratic Leader Pelosi,
The need to develop a national framework that would protect millions of American consumers from duplicative and discriminatory taxes from being imposed on digital commerce is an issue we have been working on for a number of years. Senators John Thune (R-SD) and Ron Wyden (D-OR) and Representatives Lamar Smith (R-TX) and Steve Cohen (D-TN) recently introduced S. 3581 and H.R. 7058 respectively, the Digital Goods and Services Tax Fairness Act of 2018, that would set up a framework that states could follow to impose taxes fairly on the digital economy, if and only if, they choose to tax such commerce.
The use of the internet has vastly transformed the way commerce is conducted, including the exponential growth we have seen in the purchase and use of digital goods and services. This is a segment of the economy that is only going to continue to grow. For example, the digital music industry has gained significant momentum over the last decade thanks to the consolidation and growth of a wide range of digital platforms for accessing and playing music, such as streaming services, downloads, and digital media players. As a result of the shift in music consumption, digital music accounted for half of all the revenue generated by the music industry last year and will continue to see substantial gains in the years to come.
Given the unique way digital commerce is transacted, it is possible for multiple states to claim the right to impose taxes on a given digital transaction, leaving the consumer potentially subject to multiple and duplicative taxes. Congress has previously addressed a very similar disruptive tax situation with the use of mobile phones by clearly identifying which state has the right to tax wireless services. The existing state laws governing interstate commerce are outdated to the point where they cannot adequately address the complexities that surface in digital sales. Considering how rapidly the digital market is growing, the need for this legislation is imperative to provide a clear roadmap for states to follow, if they so choose, to fairly impose taxes on digital goods and services in today’s new economy.
Again, it is important to note that the bill would not mandate any state to tax a digital good or service, nor would it establish any sort of national sales tax on digital commerce. The framework would merely set up a system providing the legal certainty needed for how state and local taxes can be applied equitably and fairly to the digital economy. The framework is relatively simple – the state in which you reside would determine the tax status of the digital transaction. It would also eliminate confusion for consumers and businesses by ensuring the taxation of a digital song or software download is the same as the tax rates imposed on music or software CDs purchased at the local store.
Accordingly, we strongly urge you to enact this important legislation before the end of the 115th Congress.
Harry Alford, President/ CEO, National Black Chamber of Commerce
Tim Andrews, Executive Director, Taxpayers Protection Alliance
Karen Camper, National President, National Organization of Black Elected Legislative
Mario H. Lopez, President, Hispanic Leadership Fund
Katie McAuliffe, Executive, Digital Liberty
Grover Norquist, President, Americans for Tax Reform
Stephen Pociask, President and CEO, American Consumer Institute
Pete Sepp, President, National Taxpayers Union
Tom Schatz, President, Council for Citizens Against Government Waste (CCAGW)