Baltimore Sun editorial supports online sales tax collection

The Baltimore Sun has published an editorial supporting online sales tax collection. It begins:

There’s no denying the convenience and simplicity of shopping online. Successful retailers like Amazon.com and Overstock.com have become giants as a result. Small wonder that online sales have grown to an estimated $200 billion annually, or about 7 percent of all retail transactions that take place in this country.

But should taxpayers be forced to subsidize the industry? That’s essentially what happens now as the bulk of digital sales are not subject to state and local sales taxes. Not only does it give virtual commerce a big advantage over their Main Street competitors but it means that states have to balance their budgets with revenue from other taxes instead. (emphasis added)

The rest of the editorial is equally strong, addressing concerns about online sales tax collection (particularly political concerns) head-on. We were particularly excited to see that it directly refutes those who call sales tax on online purchases a new tax or a tax increase:

But in vetoing the bill [that would have made more Internet companies subject to his state’s sales tax], Governor Perry also acknowledged that something needs to be done to make the system fair. That will require action by Congress where, unfortunately, Republicans appear loath to take any action that might be construed as a tax increase.

Of course, this is nothing of the kind. Rather, it’s an acknowledgement that Internet retailers no longer require the sales tax exemption that might have seemed appropriate for the fledgling industry 19 years ago. Allowing that advantage to continue is a jobs killer—mom and pop stores that pay taxes and employ local residents are getting the short end of the stick.

It’s an excellent argument, and we highly recommend that you read the entire editorial.

We do want to correct one item in the article, however:

One promising alternative is an ongoing effort to create a streamlined sales and use tax—a standardized sales tax nationwide. So far, 24 states have signed onto the agreement.

This statement could be easily misinterpreted to suggest a single nationwide sales tax rate. While it’s clear that they’re talking about the Streamlined Sales and Use Tax Agreement (SSUTA), readers should be alerted that SSUTA does not create or recommend a single nationwide sales tax rate.

States that are members of SSUTA agree to standardize sales tax categories and definitions, so that what falls into the category “candy” in one state doesn’t fall into the category “food” in another. They also agree to use standard tax return forms, so that retailers don’t need to fill out a different form for every state, and they agree to standardize other sales tax data, such as tax base definitions. All of this is designed to make it easy for retailers to collect sales tax for multiple states.

But SSUTA does not create a single sales tax rate for its member states, as the editorial seems to suggest. Every SSUTA state still retains the autonomy to set their own sales tax rate.

With that one correction, we can wholeheartedly recommend the editorial—which, incidentally, is just the latest in a long line of articles supporting online sales tax collection.

One Response to Baltimore Sun editorial supports online sales tax collection

  1. […] blogged recently about editorials in the Washington Post, the Press Enterprise (Riverside, CA), the Baltimore Sun, and the Mississippi Press, and we expect more and more editorials in favor of federal legislation […]

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