In September, California Governor Gray Davis vetoed a bill that would have clarified state law to require that all retailers with a physical presence in the state collect sales tax on internet transactions.
Despite the veto, the campaign to enact the bill accomplished a great deal by raising awareness and building support for tax fairness at both the state and national level. Thousands signed petitions or contacted their state representatives. Several major newspapers endorsed the bill. Moreover, many believed the bill had little chance in a state with a powerful high tech sector. It won both legislative houses by significant margins.
Supporters of tax fairness are now turning their attention to a bill in Congress. Sponsored by Senator Byron Dorgan, the measure would authorize states to require retailers with more than $5 million in sales to collect sales taxes on remote purchases (i.e., internet and mail orders). Currently, internet retailers are exempt from collecting sales tax, giving them a six to eight percent price advantage over local stores.
