WASHINGTON (Aug. 25, 2016) – The R Street Institute responded to today’s introduction of draft legislation by House Judiciary Committee Chairman Bob Goodlatte, R-Va. The “Online Sales Simplification Act” would strengthen eroding limits on state tax power and establish a new “hybrid origin sourcing” tax framework for internet sales.

“Though we are reviewing details, we welcome Chairman Goodlatte’s fresh thinking to what had become a very stale debate. His legislation should prove the final nail in the coffin of fatally flawed bills like the Marketplace Fairness Act and Remote Transactions Parity Act, both of which would empower states to tax outside their borders,” said R Street Executive Director Andrew Moylan, who was invited to testify before the House Judiciary Committee on the merits of origin sourcing in 2014.

In-person sales made in brick-and-mortar stores, which account for 92 percent of total sales, already use origin sourcing, in which tax is collected based on the physical location of the business and not the residence of the consumer. R Street and other limited government advocates have long argued that origin sourcing should be extended to the remaining 8 percent of sales that occur online, since an unworkable “destination sourcing” system would wipe away all geographic limits to state tax power, impose staggering complexity on internet-enabled businesses, and create an uneven playing field between local and remote transactions.

“We look forward to examining the language in greaterdepth to see how it matches with the important principles of maintaining limits on state tax power, encouraging tax competition and ensuring simplicity for businesses that sell online,” Moylan said.

Featured Publications