Mnuchin Signals Administration May Back States Collecting Online Taxes

Treasury secretary Steve Mnuchin told a Senate Appropriations Committee audience at a hearing Wednesday that the administration is coming out with a position on state collection of internet taxes and signaled that could be a way to pay for needed infrastructure upgrades.

Currently states can collect taxes on sales by businesses in the state but not on online purchases by residents of the state.

Congress last year passed a bill permanently banning internet access taxes but continues to mull the Marketplace Fairness Act, which would allow states that simplified their own sales tax laws to require online retailers to collect sales taxes at the time (point) of the sale. Democrats, generally supportive of the act, wanted to vote on both bills, but that didn't happen.

Asked by Marketplace Fairness Act supporter Sen. Joe Manchin (D-W.Va.) to weigh in, Mnuchin said that the administration has been looking at the issue "very carefully" and expected to come out with an official position "shortly."

President Donald Trump has tweeted, amidst his attacks on the Washington Post as fake news, that Amazon—which is headed by Jeff Bezos, who also owns the Washington Post—was unfairly skirting taxes, suggesting the president supports being able to tax online sales, at least by Amazon. 

Such tweets raise the issue of whether the president’s positions on such issues would be swayed by a desire to punish news outlets he feels are being unfair. Similar questions have been raised about his attacks as a candidate on the merger of AT&T with Time Warner, which owns another prime target of the president's fake news broadsides: CNN.

Mnuchin said he was encouraged that Amazon was now charging taxes on their own sales.

He also said there is an "awful lot of money that's not being collected that is due to them [states] and that that could be used to support infrastructure.

Republicans generally oppose the Marketplace Fairness Act as a new tax that would hurt small online businesses.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.