Play By the Rules or Go Home
Companies must play by the rules of states they do business in
March 28, 2013
The Senate's overwhelming, bipartisan support for the Marketplace Fairness Act stands in stark contrast to those who oppose this common-sense legislation. This is an issue whose time has come, and Senate leaders demonstrated it when choosing the Senate Budget Resolution as the time to hold a vote and move beyond Washington's perpetual stalemate.
In our federalist government, states must be allowed to control their tax systems. In this case, however, the Supreme Court said that only Congress can give the states the authority they need to require collection from out-of-state vendors selling into their states. In other words, although the tax already is owed, states cannot compel out-of-state sellers to collect the sales tax without federal legislation.
Much of the Supreme Court's 1992 decision was based on catalog sales and the apparent complexity of sales taxes in 50 states. While this argument is still used by opponents, does anyone really believe that a merchant who can navigate the Internet to sell across state lines cannot figure out how much sales tax is due?
Opponents of Marketplace Fairness also distort the facts by calling this legislation a tax increase. Of course, this is not a tax increase—it is a means of collecting taxes already owed by consumers. Nor is it a tax on the Internet or on business; it's a tax on the goods and services that are sold over the Internet.
From the states' point of view, if a company is doing business, selling goods and soliciting customers in their state, that company should have to play by the state's rules. If a state has a sales tax, then everybody selling goods in that state should have to collect and remit it. This philosophy is not only fair, it promotes competition, which is good for consumers; helps with collections, which keep other taxes down and helps pay for essential services; and levels the playing field for business, creating certainty.
In a 21st century economy, it does not make sense to play by 1950s rules. A sale no longer requires a storefront or a handshake. The Internet has spurred our economy and increased choice, but it doesn't need a subsidy—it needs to follow the rules like everyone else. Main Street retailers contribute to their communities, sponsor the little league teams and hire our citizens. Congress should act so that the marketplace is fair and winners and losers are determined by commerce, not Congress.