Lawmakers look to limit taxes on digital goods

The House measure was introduced by Reps. Lamar Smith (R-Texas), the chairman of the House Judiciary Committee, and Steve Cohen (D-Tenn.) The legislation has garnered the support of groups like CTIA as well.

It also comes as many states are facing deep shortfalls, with the liberal Center on Budget and Policy Priorities reporting in March that state tax collections have dropped 11 percent since the recession. Unlike the federal government, 49 of 50 states require themselves to have balanced budgets each year.

That has led state tax collectors to express skepticism about some measures that would limit their ability to collect revenue, like a House proposal that seeks to specify when a state can impose business activity taxes on a company headquartered elsewhere.

A spokeswoman for Wyden said measures like the Internet Tax Freedom Act, which bars goods sold online from being hit with multiple taxes, already limited state and localities’ ability to tax digital goods. But Jennifer Hoelzer added that states have gotten creative in their attempts to tax certain goods, noting states’ push to have Amazon collect sales taxes. 

A House Judiciary subcommittee plans to hold a hearing on their legislation this month.