WSJ: TN ‘illustrative of political crosscurrents’ on Internet sales tax bill

Legislation that would allow states to collect online sales taxes has emerged as a point of tension in high-profile Senate primary races around the nation, creating new uncertainty on an issue that business has long looked to Congress to resolve, according to the Wall Street Journal.

Antitax candidates in Republican races in Wyoming, South Carolina and Tennessee have sharply criticized the legislation and the incumbent senators who voted for it last spring. Now, some Republicans in the House are worried about the political risks of supporting it.

..When the Senate passed the bill by a wide margin in May, it was seen as a big breakthrough for legislation that had been bottled up in committee for years. Supporters thought it could be one of the few major bills to pass a divided Congress this year. It is now in the hands of the House Judiciary Committee.

Since the Senate vote, opponents led by eBay and other online merchants have intensified their efforts to defeat or modify the bill. Antitax activists, including former GOP presidential candidate Ron Paul and the tea-party movement, have stepped up opposition.

…In Tennessee, GOP Sen. Lamar Alexander is facing criticism from his tea-party-allied primary opponent, state Rep. Joe Carr. “I think it’s a reflection that he [Mr. Alexander] is unwilling to challenge establishment ideas,” Mr. Carr said in an interview.

Mr. Alexander sees the issue as one of fairness, said spokesman Jim Jeffries. “This bill is about two words Tennesseans strongly support—states’ rights: whether states are free to collect already-existing sales and use taxes from some of the people who owe them or from all who owe them,” Mr. Jeffries said.

Rep. John Duncan (R., Tenn.) said in his September newsletter that after a public debate in Tennessee, he now has “very mixed feelings” about which way to vote on the measure.

Tennessee is illustrative of the political cross-currents around the issue. Like many Sunbelt states, it is heavily dependent on its sales tax. Several state GOP leaders, including Gov. Bill Haslam, are prominent supporters of the federal legislation as a way to avoid instituting a state income tax as the sales-tax base erodes.

On the other hand, a recently released poll by two conservative advocacy groups, National Taxpayers Union and R Street, shows that voters nationally oppose the legislation by 57%, and opposition runs highest in the South, at 61%. The poll concluded that support for the measure “is a dangerous vulnerability” for GOP incumbents, though backers of the bill say their own polling shows growing support among voters.

“People like their tax-free Internet,” said Glenn Jacobs, a WWE professional-wrestling star known in the ring as “Kane,” who has also become a high-profile libertarian activist in his home state of Tennessee.