Create a Fair and Simple Tax for E-Commerce

February 21, 2012
Fairness, simplicity and parity should guide federal legislation for internet sales tax.

Three pieces of legislation were introduced in Congress in 2011 to authorize states to require out-of-state retailers, including online sellers, to collect and remit sales tax. In this report, ITIF Senior Analyst Daniel Castro argues that Congress should find a balance that allows states to collect these taxes without imposing a burden on out-of-state retailers. He proposes three principles—fairness, simplicity and parity—that should guide the development of federal legislation and offers specific guidance on how such legislation should be crafted.