One of my wife’s favorite hobbies is taking out the laptop and shopping online.  She can buy clothes for my son, she can shop for shoes, she can get great deals at a variety of stores, and she can do it without paying pesky local taxes.

That is because under U.S. law, local and state government can’t collect taxes on Internet sales.   That may start to change under the Democrats in Congress.

As Congress left to go on the 4th of July recess, Representative Bill Delahunt, a Democrat from Massachusetts, introduced a bill that requires small businesses to collect sales tax on Internet transactions.

Delahunt announced that he was retiring at the end of the year, which may explain why he is taking the lead on this unpopular issue.

The bill was referred to the Judiciary Committee, because while this bill concerns taxes, it is first and foremost a bill about federalism.

Does a locality have the right to tax a business that isn’t located in its jurisdiction?

Does a state have the right to raise taxes on companies that don’t do anything other than import products into the state?  Read more...