Survey: US residents oppose Internet sales tax

More than six in 10 people answering a survey oppose legislation that passed in the Senate

The U.S. Senate has, by a wide margin, supported a bill allowing an Internet sales tax, but the legislation appears to be a tougher sell to the public.

Sixty-one percent of U.S. residents surveyed by online postage vendor Endicia said they don't support the Marketplace Fairness Act, which would allow states with sales taxes to collect those taxes from large online retailers. The Senate voted 69-27 to approve the Marketplace Fairness Act last Monday.

If the Marketplace Fairness Act passes through Congress, 44 percent of respondents said they would buy fewer products online, and 12 percent said they would buy more products at hometown bricks-and-mortar stores. Another 4 percent said they would buy more at large retail chains, and about 40 percent said the legislation would have no impact on their online shopping habits.

The House of Representatives would need to pass the bill and President Barack Obama would have to sign it before it becomes law. Obama has voiced support for the legislation.

Sixty percent of the 1,095 respondents to the online survey said they believed the legislation would be bad for the U.S. economy.

Endicia's survey found that 74 percent of respondents had heard of the legislation. Thirty-nine percent approved of the bill, and 35 percent of those who approve said they do so because it would create taxing fairness for bricks-and-mortar and online retailers.

Fifteen percent said state and local governments need the sales tax money. The other 50 percent of respondents who approve of the sales tax said they did so for both reasons.

Of those who oppose the tax, 40 percent said it's because they are already overtaxed, 14 percent said the tax would be unfair to small Internet sellers and 46 percent said it was for both reasons.

Endicia has taken no position on the Internet sales tax, a spokeswoman said.

The bill would allow states to collect sales tax on large Internet sellers that have no presence within their borders, curtailing the ability of Internet shoppers to avoid sales tax. Now, online retailers only have to collect taxes in states where they have a physical presence, including retail stores and warehouses.

Online sellers with less than US$1 million in annual Internet sales would be exempt from collecting the taxes.

Lawmakers have been fighting for more than a decade to pass Internet sales tax legislation, and some businesses have called on Congress to fix the problem since a 1992 Supreme Court case that prohibited states from collecting sales tax from sellers that have no physical presence within their borders.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

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