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Taxes, Immigration, and the Senate’s Identity Crisis

As Bethany has previously written, the problems with the new Internet sales tax, which passed the Senate this week, were depressingly obvious–even as the bill received Republican support. But perhaps the most unfortunate aspect of the bill is not that Republicans should have known better, but that they did know better and voted against both economic common sense and the best interests of small businesses around the country.

The legislation would have forced businesses to pay sales taxes in the home state of every online customer, thus adding a burden to doing business that large retailers could handle but their upstart competitors could not. But to listen to Republicans defending their votes in support of the measure, you could be forgiven for thinking that upholding crony capitalism was a virtue of the bill, not an unfortunate element to be downplayed. (Though it was called the Marketplace Fairness Act, Grover Norquist more accurately referred to it as the “Let People in Alabama Loot People in New York Act.”) Here, for example, is how John Thune is quoted by the New York Times:

“It’s obviously an issue that can be divisive for Republicans because a lot of the antitax groups are weighing in against it,” Senator Thune said. “But in states like mine where you’ve got a lot of smaller retailers trying to compete in smaller communities, people are going to do their business online, and that has grown dramatically over the last few years.”

Antitax groups are against it, but Thune wants to protect his favored businesses and let the government get involved in picking winners and losers. There is a bright spot, however. The Times had reported on the bill’s momentum: “Earlier test votes won as many as 75 yeses. And House action, once seemingly unthinkable, may be unstoppable.” But Speaker of the House John Boehner is signaling that reality is closer to the former than the latter, according to the LA Times:

House Speaker John A. Boehner said he probably won’t support legislation allowing states to require that larger retailers collect sales taxes on Internet purchases.

And a key House committee chairman said his panel would take a “more thoughtful” approach to the bill, which passed the Senate overwhelmingly Monday.

The comments signaled that momentum from Monday’s easy passage of the bill in the Senate won’t lead to quick House action on the controversial issue.

All to the good, but it draws attention to an interesting dynamic at play in the Congress of 2013: namely, a bit of a role reversal between the upper and lower chambers. Traditionally, because the House can pass bills on simple majority and because revenue-raising legislation originates there, the lower chamber has played an activist role to the Senate’s deliberative role. The Senate gives every state the same number of representatives, which forces regional accommodation when crafting or amending legislation. Senators also represent entire states rather than increasingly gerrymandered districts, so addressing constituent concerns in each bill is a more complicated process.

Of course the most recognizable reason for these traditional roles is the existence of the filibuster in the Senate, which doesn’t exist in the House. It can therefore be difficult to even get to a vote.

Yet for all the attention paid to the filibuster’s use by Republicans, two things remain true: the Senate has been able to pass major liberal legislation, like ObamaCare and financial regulation, and Boehner’s House has become a break on the Senate’s penchant for far-reaching legislation.

The Internet sales tax bill is an example of a bill that was passed by the Senate but faces far dimmer prospects in the House. More significant is the fact that the House’s new role has slowed down the Senate as well. From the perspective of conservatives, this is a moderating effect; to liberals, who were wondering if the Senate could possibly get any slower, it’s the opposite. But either way, the message has come through loud and clear.

To see how this plays itself out, one need look no further than the immigration reform effort. The question of whether the final immigration bill could pass the House is not just implicit; it’s invoked almost constantly by the bill’s supporters. In order to pass the House, immigration reform proponents believe (correctly) that it would almost surely need to do more than just pass the Senate. It will need broad bipartisan support that includes conservatives who are popular with the grassroots to give cover to their counterparts in the House. Additionally, the bill’s chief proponent, Marco Rubio, has been warning his fellow senators in the “gang of eight” that the bill cannot pass the House as currently constructed–a clear exhortation to take House conservative concerns about border security into consideration when amending the bill.

The reviews of this role reversal will likely be mixed, even among conservatives. There will be many on the right justifiably frustrated if the immigration reform effort stalls in the Senate because of the fear of House Republicans. But it will also be difficult to argue against the House’s instinctive distrust of crony capitalist bills like the Internet tax hike. Senate Republicans might also wonder why, especially on the issue of market distorting tax increases, they need the House to slow them down in the first place.



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