Federal legislation introduced on July 29 would expand the collection of sales taxes on Internet purchases. Public surveys have shown that voters overwhelmingly oppose Internet sales taxes.. A 2008 survey by Parade Magazine, asked readers: “Should Internet sales be taxed?” Based on 3,125 survey responses, 85% opposed taxing Internet sales. This new legislation (HR 2701 and S1452) would require consumers to pay a sales tax on even more of the products they buy online, despite the fact that the vast majority of voters oppose any tax on Internet sales. Many types of tax increases are unpopular, but with 85% opposed, this one is surely among the most unpopular.

Sponsors of the legislation, titled the “Main Street Fairness Act” should add to the title  “and Garage Sale Tax Collection Act”. According to AC Nielson International Research, 1.5 million people have generated extra cash by having garage sales online. Sometimes the garage sale proceeds can be quite substantial, such as when a couple may be downsizing or retiring, or moving to another state. This legislation creates a Governing Board made up of unelected tax administrators who would determine at what sales level homeowners and other consumers would have to begin collecting sales taxes on their online garage sales. Nothing would prevent them from setting that amount very low.

Voters clearly believe that an Internet sales tax moratorium would be a much better public policy. There is clearly precedent for such a step. Over the years, state and local legislators and policymakers have established permanent sales tax exemptions for various categories of purchases, such as prescription drugs as well as temporary sales tax holidays for such things as back to school purchases.

Since more Internet purchases means less driving to the mall, it will also reduce state and local government costs for the maintenance and expansion of the transportation infrastructure. Reduced demand for gasoline will translate into lower gas prices, and the environment will benefit from reduced auto pollution as well. Our cars will remain in our driveway, and the products will be delivered by the U.S. postal carriers, UPS and FedEx trucks that go through our neighborhood every day anyway.

Many of the nation’s 70 million homeowners are suffering because of the economy and the housing crisis. They don’t need a tax increase that they oppose and which hurts many consumers and small home-based businesses. The American Homeowners Grassroots Alliance urges the sponsors (Senators Durbin and Thompson, and Representatives Conyers and Welch) to withdraw the Main Street Fairness Act. In its place they should introduce the Internet Sales Tax Moratorium Act, which would prohibit sales taxes on online purchases. They would have the support of 85% of their constituents, many of whom are hard pressed financially these days and could benefit from the tax savings.