The House Judiciary Committee’s Regulatory Reform, Commercial and Antitrust Law Subcommittee held a hearing on three bills Tuesday regarding nexus and taxation: the Mobile Workforce State Income Tax Simplification Act, the Digital Goods and Services Tax Fairness Act and the Business Activity Tax Simplification Act. In particular, as part of the Download Fairness Coalition (DFC), CCIA has supported the Digital Goods and Services Tax Fairness Act, which would establish a national framework for how state and local taxes apply to digital goods and digital services so as to prevent multiple and discriminatory taxation. Jot Carpenter of CTIA – The Wireless Association represented DFC in testifying at the hearing.
The Digital Goods and Services Tax Fairness Act, sponsored by Rep. Lamar Smith (R-Texas) and Rep. Steve Cohen (D-Tenn.), prevents multiple taxation of a digital good or service transaction by clarifying that the customer’s tax address is the only jurisdiction with the right to tax a digital transaction. It also prohibits the taxation of digital goods and services at a higher rate than similar non-digital goods and services. CCIA supports the bill as a way to provide certainty and fairness to the growing digital marketplace and to stop, what is in effect, the punitive taxation of innovation.
In his opening statement, Judiciary Committee Chairman Bob Goodlatte (R-Va.) characterized the theme of the hearing as “No Regulation Without Representation,” and underscored the importance of the physical presence standard to prevent states from taxing and regulating beyond their borders. Such extra-geographic action “permits lawmakers to dodge accountability for the burdens associated with their policy choices by shifting them onto non-residents who cannot hold them accountable at the ballot box.” We appreciate Chairman Goodlatte’s vision and leadership in promoting the importance of maintaining the link between physical presence and taxation, whether it be on digital goods and services, business activity or e-commerce sales.