Online Purchases Should Be Taxed, Gates and Buffett Say

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Two of the richest men in the world are sticking-up for brick-and-mortar businesses big and small, which have long complained that their online competitors have an unfair advantage because they don't have to collect state sales taxes.

Warren Buffett and Bill Gates told CNBC that the Internet sales-tax bill, which passed the Senate on Monday, makes sense.

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The bill, which still needs to clear the House, would empower states to require businesses to collect taxes for products they sell on the Internet, in catalogs, and through radio and TV ads.

Under current law, states can only require retailers to collect sales taxes if the store has a physical presence in the state.

The measure faces opposition in the House from Republicans who view it as a tax increase.

"It's very unfair to the person who has a physical store that not only do they have those expenses but that the [online business] isn't collecting sales tax," Microsoft Chairman Gates said in a "Squawk Box" interview Monday.

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In addition, he said, the bill "is a good thing for state budgets."

Under the legislation, the sales taxes would be sent to the states where the shopper lives.

Appearing on CNBC with Gates in Omaha Neb., Berkshire Hathaway's Buffett agreed. "I think the fairness argument is compelling. You've got thousands of merchants here in Omaha and have people walk into those stores, look at the item, and then order it from somebody out of state and then not pay a sales tax."

He added, "To have that as a differential in their cost is just unfair."

The legislation, formally called the Marketplace Fairness Act, exempts businesses making under $1 million annually in out-of-state sales.

—By CNBC's Matthew J. Belvedere. Follow him on Twitter @Matt_SquawkCNBC.