Posted on 03/11/2015 1:47:21 PM PDT by E. Pluribus Unum
Senators introduced a bill Tuesday that would make online purchases subject to sales taxes, eliciting praise from brick-and-mortar retailers but condemnation from anti-tax advocates.
Currently, online retailers only have to collect sales taxes in states where they have a physical presence, such as offices or warehouses, allowing customers in most states to realize an automatic discount of between about 4 and 10 percent on their online purchases.
The Marketplace Fairness Act, sponsored by Republican Sens. Mike Enzi and Lamar Alexander and Democratic Sens. Dick Durbin and Heidi Heitkamp, would close that loophole, forcing online shoppers to pay local sales taxes on all purchases. (RELATED: Costly Internet Tax Could be on the Horizon)
In a press release, the International Council of Shopping Centers applauded the bill’s introduction, saying the MFA “will get the government out of the way, restore the free market, and close the loophole that has given an unfair advantage to online-only sellers like eBay and Overstock for over a decade.”
ICSC contends that “a ‘sale is a sale’ regardless of whether the purchase takes place on Main Street, at shopping centers, or over the Internet,” but says the current system fails to recognize that, giving online purchases privileged tax treatment that is not available to physical retailers. (RELATED: Supply-Side Founding Father Boosts E-Commerce Sales Taxes)
Betsy Laird, senior vice president of Global Public Policy for ICSC, claimed that brick-and-mortar retailers “are fed up” with competing against online competitors who have “a de facto government subsidy,” as well as with the “higher property taxes and unnecessarily high sales taxes” that states impose to make up for the revenue they are unable to collect from Internet commerce.
Conversely, R Street Institute, a free-market think tank, argues that, “far from a ‘loophole’ intended to advantage the Internet,” the so-called physical presence standard is a necessary protection for both online sellers and taxpayers. (RELATED: The Marketplace Fairness Act will be as Hard to Implement as Obamacare)
Whereas physical retailers only need to comply with the rules and regulations of the states in which they do business, the group explains, the MFA would “[force] remote retailers to determine the appropriate rules and regulations in as many as 46 different states with sales taxes, and then collect and remit sales tax for that distant authority.”
In addition, R Street says the MFA “would countenance an enormous expansion in state tax-collection authority,” thereby exposing consumers to “harassment by out-of-state collectors.” The existing arrangement, the group asserts, is “grounded in a bedrock foundational principle of tax policy: [that] states must not be allowed to extend their taxation and regulatory authorities beyond their borders.”
Heitkamp, however, countered that argument in a press release by pointing out that, “While most consumers are unaware, they are already legally required to pay sales tax on internet purchases.” Compliance is rare, though, because states are not currently empowered to compel the payment of those taxes.
The MFA, she added, would merely “[allow] states to decide whether to require remote sellers to collect sales and use taxes … instead of requiring customers to remit those taxes to the states on their own.”
A nearly identical version of the MFA passed the Senate handily (69-27) in 2013, but stalled in the House Judiciary Committee and expired at the end of Congress’ last session. (RELATED: Conservative Groups Split on Marketplace Fairness Act)
Laird nonetheless expressed optimism that the lower chamber would act this time around, saying, “We believe that this is the year they will finally stand up for local businesses that create jobs and support our communities.”
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I have a friend who sells things online and charges sales tax to people from New York and California.
She calls it ‘unearned profits’.
The fact that they see fit to name it the “fairness” act tells me it is anything but.
> stand up for local businesses that create jobs and support our communities
What business isn’t local to somewhere?
Why both? I'm assuming that she's a small business and only has a location in one or the other of those states.
Follow the money. Retail industry lobbyists have been getting these guys fed, drunk and laid.
I guess they don’t care how much stress that will put on businesses to file 50 different sales tax returns.
I’ve always had mixed emotions on this. It was great buying from Amazon with no sales tax, but it’s definitely a penalty for local business.
Every day, EVERY DAY they come after more and more and MORE of what we own and produce. They NEVER NEVER NEVER stop. And the Republicans are just as bad about it as the Communist Democrats.
There are a lot of sites out there that CHARGE sales tax to certain people and then just pocket the money as extra profit.
Fifty, try thousands. Every county as its’ own sales tax. Where I live it is 7.5% That includes 6% state and 1.5% county sales tax. Of course the local retailers round up to 8% so they get to pocket .5% on every transaction. On $1,000,000 in sales that is $5,000.
People don’t have a bottomless pit of money. Funnel away 10% for new taxes and there will be 10% less going to online businesses.
So I guess Brick and Mortars will now be asking where the buyer lives and sending in the tax paid to the buyers city or state- I thought not it will stay in the local jurisdiction of where the shop is. Same for on line it goes to wherever the online store has a physical presence.
This will not help Brick and Mortars to make more money. I buy online because it is convenient to me and I can find lost of different items.
Does Congress have the authority to dictate when and where state and local taxes are collected?
Not to mention states like Ohio where the sales tax changes from county to county and town to town.
Or Pennsylvania where a zillion nonsensical items are exempt.
I don’t see how they’re gonna implement it.
This crap again?? Why did we even bother electing a GOP-controlled Senate? And I suppose this is the kind of thing they’ll really fight “tooth and nail” for because it benefits some business interests.
Alrighty then. Thanks.
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Wal-Mart is going to regret lobbying for this. Amazon will no longer have a reason to avoid a physical presence. They will set up local distribution centers and offer 60 minute delivery.
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