Conservatives are Split over Online Sales Tax

The architect behind Reagan-era economic policies is getting behind a plan that would allow states to collect taxes on online shopping – fueling a battle in Congress that has pitted conservatives against conservatives. 

Renowned economist Arthur Laffer argued in a study, to be released Thursday, that taxing online purchases would stimulate growth and create more than 1.5 million jobs over the next 10 years. 

The problem, some say, is that the plan slices through decades of conservative Republican ideology – much of which he had a hand in crafting.

“This bill is a mad bill and unfortunately it passed the U.S. Senate,” Sen. Ted Cruz, R-Texas, said during a press conference this week. 

Cruz, along with Tea Party favorite Sen. Rand Paul, R-Ky.; Americans for Tax Reform President Grover Norquist; and Heritage Action for America’s Michael Needham, vowed to fight the legislation which passed the Senate in May but will likely face greater opposition in the GOP-controlled House. 

Critics, like Cruz, argue the policy is unfair to small businesses by burdening them with requirements to implement the new tax.

Laffer says the bill offers cash-strapped states a shot at beefing up their budgets and argues the plan doesn’t create a new tax but instead gives states the opportunity to go after taxes they were already owed. 

“All taxes are bad, some are just worse than others,” Laffer told FoxNews.com during an interview on Wednesday. “When you look at this carefully, this is exactly what you want. The lowest tax rate on the broadest possible base.”

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