Opinion

April 24, 2013

Bring fairness to unbalanced competition

There is a piece of legislation moving through the U.S. Senate that would require online retailers to collect sales tax on purchases. Currently, states can only demand that online retailers that have a physical presence in their states, like a store, a warehouse or a factory, collect sales taxes on purchases by residents of that state. People who buy goods online tax free are supposed to make sales tax payments on those purchases to their home state government. But estimates are only about 1 percent of buyers comply with those widely unenforced laws.

We see this type of law bringing balance to an unbalanced competition. This is only fair to the local brick and mortar retailer that just sells their product locally and has to collect sales tax. This law is also endorsed by the National Retail Federation and even the largest online retailer, Amazon.com. The law would require sellers with more than $1 million a year in sales to be responsible for collecting the tax from buyers in the 45 states plus Washington, D.C., that currently charge sales tax. The most widely quoted study from 2009 shows that there would be $12 billion in taxes. However, online purchases have risen significantly since then. Some estimates are that tax collections could be nearly double that amount.

In a very unusual occurrence this legislation has strong bipartisan support, with the lead sponsors in both houses Republicans. This past Monday a Senate procedural vote passed with 48 Democrats and 26 Republicans in support.

We are very rarely supporters of any taxes, but we see this as enforcing law that already exists and making the small local retailer more competitive.

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