Congress Must Act to Modernize Sales Tax Policy
Online-only retailers are exempt from collecting sales tax at every point of purchase
August 8, 2012
Main Street retailers, the backbone of America, stimulate local economies, build communities, and provide good, stable, local jobs. However, these jobs are being threatened by online retailers fighting to preserve an unfair price advantage of as much as 10 percent over brick and mortar retailers.
Local retailers are part of the place we call home. They play an integral part of many civic and charitable organizations and maintain economic stability and our overall quality of life. Online-only retailers have little need or incentive to invest in our cities and towns.
In today's marketplace, the shape of commerce is changing, but the rules remain stuck in 1992—well before the era of the iPad, smart phones, and even home Internet access. Online-only retailers are exempt from collecting sales tax at every point of purchase.
Some argue that online retailing is still a nascent industry, but, in fact, this year alone online sales are expected to grow four times faster than brick and mortar sales. As online retailers exploit an unfair sales tax loophole, communities across the country are hurting and jobs continue to be at risk.
The National Conference of State Legislatures estimates that states will lose $23 billion in uncollected taxes from online sales this year due to the Internet sales tax loophole. As legislators grapple to fill budget gaps, this revenue from taxes that are due would go a long way toward adequately funding essential public services: paving roads, keeping police and firefighters on the job, and providing our children with a quality education.
The Marketplace Fairness Act and the Marketplace Equity Act are two bipartisan bills under consideration in Congress that would help fix this problem. Both proposals simplify the collection process to benefit consumers, retailers and states, while providing an exemption for small online businesses. It's a win-win situation, unless you're a larger online retailer that wants to keep the competitive advantage this tax loophole provides.
The status quo is no longer conducive to a thriving 21st century retail marketplace. A sale is a sale no matter if it happens through the click of a mouse or at a cash register. Congress must act now to modernize our sales tax collection policy to keep pace with the world we live in today. The cost to consumers, states, and Main Street businesses is too great for us to ignore any longer.