When online sales tax means less income tax

July 18, 2013
Art Laffer

Art Laffer

Today’s issue of USA Today has an interesting piece by Art Laffer on how changes to the tax code can lead to economic growth. His main suggestion? Close the online sales tax loophole.

He writes:

Because state sales taxes generally have fewer loopholes and lower rates — and therefore have a lesser impact on growth and employment — pro-growth policies should favor sales over income taxes where possible.

The governors of Wisconsin, Iowa, Maine, and Ohio are already planning to put this idea into action.

If the Marketplace Fairness Act passes and these states are allowed to require online retailers to collect sales tax, the governors say, they’ll cut income taxes by an equal amount. So if online sales tax generates, say, $1 million in revenue, the cut in income taxes will equal $1 million in revenue.

There are multiple benefits to this approach, for both small businesses and taxpayers. First, it helps out the mom-and-pop businesses on Main Street, which are having a hard time competing with online retailers who don’t have to collect sales tax. The Marketplace Fairness Act levels the playing field by requiring all retailers to play by the same tax rules.

At the same time, it’s a win for taxpayers, who won’t see any increases in their overall tax bills.

For those who worry that enforcement of online sales tax will lead to more government spending as state and local governments see tax revenue rise, there’s another benefit: Since these states won’t see an overall change in their tax revenue, there’s no opportunity for increased spending.

And Laffer offers solid statistics on how online sales tax will help grow the economy:

Gross state product would increase from 1.2% in Alaska to 4.6% in Washington state over 10 years. States would see jobs created, anywhere from about 2,000 in Vermont to more than 180,000 in California. Gross domestic product would grow by more than $563 billion, creating 1.5 million jobs nationwide.

We think this idea is a win for everyone, especially in more conservative states that want to support local small businesses and avoid more government spending at the same time.

Of course, it’s dependent on the passage of the Marketplace Fairness Act. We hope that Congress—especially the representatives from Wisconsin, Iowa, Maine, and Ohio—is listening.


OH Gov. Kasich vetoes state online sales tax in favor of federal legislation

July 3, 2013
boehner-kasich1

Ohio Governor John Kasich (L) with Speaker of the House John Boehner

On Sunday, Ohio Governor John Kasich vetoed a line item in the state budget that would have required online sellers to collect sales tax from Ohio residents. His reasoning? He believes Congress needs to act on the issue first.

Governor Kasich isn’t the first lawmaker to voice that opinion—most state legislators seem to agree that the best scenario for everyone is that Congress, not states, revise the rules of online sales tax. But since Congress has yet to act, many states have begun instituting their own online sales tax laws like the one Governor Kasich vetoed.

State laws on the issue are, by necessity, more complex than a federal law would be, which can create problems for online businesses, particularly marketing affiliates.

Although we certainly sympathize with states that want to be able to enforce their own sales tax laws, we agree with Governor Kasich that Congress is the right place for online sales tax to be addressed. Here’s hoping the House of Representatives follows the lead of the Senate and takes it up soon.


Members of Congress, National Governors Association, and small businesses speak in support of online sales tax

June 24, 2013

At a press conference last Wednesday, Representatives Steve Womack (R-AR) and Jackie Speier (D-CA) and National Governors Association Executive Director Dan Crippen spoke about internet sales tax.

Womack and Speier are strong supporters of federal legislation that would allow states to require online retailers to collect sales tax. Womack responded to opponents who say that enforcing a tax that usually goes unpaid amounts to creating a new tax: “You have to wonder, is avoiding or ignoring the law the leg on which you want to base your argument?” Said Crippen, “It’s no more a new tax than if you hadn’t been paying your property taxes, then suddenly you’re on the rolls and you start paying your property taxes.”

Also in attendance was Andrew DeMoss, senior accountant at Simms Fishing Products in Montana, who spoke to the concerns of small businesses that collecting sales tax online could be difficult. The company recently began collecting sales tax in its online store using sales tax software. “If we can do it, anyone can do it,” he said.

In May, the Senate voted overwhelmingly in support of the Marketplace Fairness Act, a bill that would allow states to require internet retailers to collect sales tax. The issue is now with the House of Representatives.


Internet retailers will have to collect sales tax, with or without the Marketplace Fairness Act

May 23, 2013

Among opponents of the Marketplace Fairness Act, there is a sense that if they succeed in blocking the bill, online retailers won’t have to collect sales tax.

Not so.

First, online retailers already have to collect sales tax for any state where they have nexus, defined as a physical presence. Warehouses and offices definitely fit the requirement, but some states also require any retailer selling at a fair or convention to collect sales tax.

More importantly, states can pass their own online sales tax laws. While the Supreme Court’s ruling in Quill v. North Dakota says that states can only require retailers with nexus to collect sales tax, states have been pushing against the edges of that ruling for some time by redefining “nexus.”

Affiliate nexus laws have been perhaps states’ most popular tool. These laws redefine “nexus” to include any retailer with a marketing affiliate located in the state. New York famously used an affiliate nexus law to get Amazon to collect New York sales tax, and with the court’s March ruling that the law can stand, more and more states are following its lead—most recently Kansas and New Mexico. West Virginia has gone even further by saying that having an individual perform services or solicit business in the state also qualifies a retailer for nexus. What is meant by “services” and “solicit” has yet to be defined.

The use of a drop shipper can also trigger a requirement to collect sales tax. If a customer and drop shipper are located in the same state, sales tax must be collected on the purchase—no matter where the retailer is located.

States are hurting for funds, and they aren’t going to ignore the $11 billion in sales tax that a University of Tennessee study found is going uncollected. If federal legislation doesn’t pass, they will continue to enact their own laws, increasing the number of retailers with nexus in the state and who therefore must collect sales tax.

Unfortunately for retailers, that means a nationwide patchwork of sales tax laws to navigate, all with varying requirements and definitions.

The Marketplace Fairness Act, in contrast, requires states to simplify and standardize their sales tax rules, so it will be easier for a retailer to collect sales tax for multiple states. And with this legislation in place, states will have no reason to pass their own laws aimed at getting online retailers to collect sales tax.


eBay and the small business exception

April 22, 2013

In an email Sunday to 40 million eBay users, eBay CEO John Donahoe urged them to oppose the Marketplace Fairness Act unless the small business exception, which exempts online retailers with less than $1 million in out-of-state sales from collecting sales tax, is raised to $10 million or 50 employees.

We’re all for making sure small online businesses don’t have to spend time or money dealing with sales tax (that’s why we created TaxCloud in the first place), but here are three reasons that raising the exemption threshold doesn’t make sense:

1. At the $1 million threshold, most online retailers are already exempt. Nationwide, fewer than 1000 online retailers* have more than $1 million in total sales. (If we consider only out-of-state sales, that figure is even lower.)

2. Collecting sales tax doesn’t require the resources of a large company. The Marketplace Fairness Act requires states to provide free sales tax software and services for online retailers, so online businesses wouldn’t need to spend anything to comply with the bill.

3. Most small online retailers already use e-commerce platforms, which can easily provide add-ons that handle sales tax, just as they provide for shipping—making sales tax collection easy for all their retailers at once. And we’d lay odds that once states can require online businesses to collect sales tax, that’s exactly what they’ll do.

By exempting online retailers with less than $1 million in out-of-state sales, the small business exception already does what it was designed to do: ensure that small online businesses are not burdened by online sales tax collection. But raising the exemption threshold to $10 million or 50 employees would be a mistake.

*According to Internet Retailer‘s Second 500 Guide, only the top 980 online retailers in the nation had over $1 million in sales in 2011.


Why the number of sales tax jurisdictions doesn’t matter

April 1, 2013

Illustration by Cory Thoman - http://clipartof.com/1087428

So what does all that mean?

First, let’s be clear: It would never mean a sales tax return or an audit for each jurisdiction. The Marketplace Fairness Act says that there has to be just one central authority in each state that handles sales tax returns and audits. So no matter how many tax jurisdictions are in a state, there’s just one return to file, and if a retailer is audited, there’s just one audit from the state. And retailers who use state-certified sales tax management services don’t need to worry about audits in general—but more on that in a moment.

So what about sales tax rates, which can vary by jurisdiction?

The good news there is that the Marketplace Fairness Act requires states to provide sales tax management software or services (such as TaxCloud) for free. These programs check and update rates and product definitions for every tax jurisdiction, and it all happens behind the scenes, so sellers don’t need to worry it.

In the end, for online sellers, collecting sales tax is much like handling shipping. There’s a program or service to set up with the online store, and then the program handles everything—no matter how many tax jurisdictions there are.

Back to audits: When retailers use sales tax management programs from state-approved Certified Service Providers (CSPs), they never have to host an audit. The CSP deals with the state instead, so the retailer doesn’t need to worry about dealing with state officials and coming up with transaction records.

Rates, audits, returns, the number of tax jurisdictions—with sales tax management services, retailers don’t need to worry about any of them. It’s all taken care of.


Voters support local tax measures

November 16, 2012

Election Results

With the election over, Politico has taken a look at how local tax measures did throughout the country. The result?

During last week’s elections, voters across the country opted to raise taxes to help their cities, counties and school districts.

“I’m OK with being taxed for making sure we don’t go under and people are taken care of,” said Elizabeth Boyd, 35, an independent voter in Sacramento. “I think it’s really good for us to pay for schools and make sure they’re kept open and teachers aren’t being laid off for ridiculous reasons.”

Whether you agree with this outcome or not, the important thing is that the system works: The people who voted on the tax measures both pay the increased taxes and benefit from the services and projects they fund. Which is as it should be.

Still, we can’t help thinking that it would have been better if the increased taxes were unnecessary. Sales tax is due on online purchases but nearly always goes unpaid, to the tune of $23 billion each year. If that money had been collected at the point of purchase, just as sales tax on bricks-and-mortar purchases is, perhaps none of these tax increases would have been necessary.

If you pay sales tax on an online purchase, it doesn’t matter where the online store is—the sales tax you pay goes to your state and local community, where it funds services that voters approved.

Most people are willing to chip in for services that benefit their community. According to the Politico article,

voters tend to have a more favorable opinion about increasing taxes when they can see that the extra revenue will benefit their community directly. A 2010 analysis by The Associated Press found that voters in a large cross-section of states passed 50 percent or more of the local tax initiatives that came before them. . . .

In California, Sacramento voters, who tend to be more conservative than other areas of the state, supported a sales tax hike by a 2-to-1 ratio in addition to two school construction bonds.

“That’s a pretty clear choice of the people,” [Sacramento] City Councilman Darrell Fong said. “They don’t want to see a reduction in service, especially when it is to public safety and parks. They know we’ve made the cuts already.”


“Fair Is Fair”: A legal perspective on the Marketplace Acts

September 11, 2012

The latest issue of Shopping Center Legal Update, a “legal journal for the shopping center industry,” has an interesting article on the Marketplace Fairness Act, Marketplace Equity Act, and Main Street Fairness Act—the three bills currently before Congress that would each allow states to require online retailers to collect sales tax.

In the article, Brian D. Huben, a partner at the LA law firm Katten Muchin Rosenman LLP, provides a legal perspective on online sales tax collection. We were particularly interested in his analysis of the Supreme Court case Quill Corp. v. North Dakota (1992). That case is responsible for the current rules about sales tax that govern online shopping, and this is the first place we’ve seen its details explained by a legal expert.

We found this part of the article, which quotes the dissenting opinion in Quill, particularly enlightening:

Some say that the past is prologue. Justice Byron Raymond “Whizzer” White, who dissented in Quill, presciently noted that “an out-of-state seller in a neighboring State could be the dominant business in the putative taxing State, creating the greatest infrastructure burdens and undercutting the State’s home companies by its comparative price advantage in selling products free of use taxes, and yet not have to collect such taxes if it lacks a physical presence in the taxing State.” Quill Corp., 504 U.S. at 328 – 329. While the stakes in Quill were decidedly smaller, the $23 billion in uncollected sales and use tax revenue cannot be ignored.

While fairly brief, this article is a great source for those interested in today’s online sales tax rules, how they came to be, and why some are arguing for change.


TheStreet.com speaks out against online “sales-tax evasion”

December 8, 2011
TheStreet

TheStreet says when online retailers don't collect sales tax, it's tax evasion

An article on TheStreet calls the lack of online sales tax collection “sales-tax evasion” and says that it’s likely to come to an end soon.

The article uses strong language to compare online retailers that don’t collect sales tax to the “gray-goods stores” of the past:

There used to be a time when sales-tax evasion was a grimy business. It required a sleazy merchant and a greedy customer, conspiring to make the transaction in cash, “tax included” (wink-wink). Once there was a string of electronics stores on Manhattan’s Lower East Side that survived by non-taxed transactions in “gray goods,” in which the state tax authorities (and sometimes customers) were systematically cheated.

Today, of course, nothing has changed.

The merchants are still sleazy, the customers are still greedy — only now, sales-tax evasion is both commonplace and organized. The name for this particular variety of organized crime is known as “Internet retailing.”

As you might expect from that opening, the article doesn’t pull its punches. It makes for a read that’s compelling as well as informative. Witness this paragraph on online retailers’ losing battle against sales tax collection:

If the Internet retailers get socked with a sales tax, they have pretty much themselves to blame. They’ve been outmaneuvered by the brick-and-mortar stores, who have successfully presented this as a David vs. Goliath battle. But in a sense there’s also the historical fact that no business model predicated on cheating the government ever works. Amazon, by supporting the legislation, is simply going along with the march of history.

According to the article, legislation allowing states to require online retailers to collect sales tax is almost certain to pass. And we were thrilled to see this comment on the argument that collecting sales tax online is too complicated or burdensome:

Amazon’s acquiescence, meanwhile, made mush of [Overstock.com CEO Patrick] Byrne’s dubious claim that modern software wasn’t up to the task of doing something as complex as computing the correct sales tax for each customer.

As our regular readers know, we created TaxCloud expressly to make collecting sales tax easy and inexpensive for online retailers. It’s hard to see how anyone could argue that it’s too difficult to collect sales tax when a free service like TaxCloud is available to not only calculate the tax due in real time, but also to file sales tax returns, process exemptions, and handle any audits.

We recommend reading the entire article for an interesting take on the online sales tax collection situation.

The article ends by taking a moral stance on online sales tax with this closing paragraph:

I know, paying taxes is annoying. But even the Internet retailers, their laissez-faire anti-tax arguments notwithstanding, rely upon government services like the Postal Service to get goods to their customers. And if they use private services like FedEx, those package-delivery trucks travel on roads maintained by local taxes. For years, the net has taken advantage of those goodies without collecting a dime, and profiting from the resulting “discount.” It’s high time that free ride came to an end.


Debunking another online sales tax myth

October 28, 2011

We’ve started seeing a new line of argument against online sales tax collection in many articles and editorials. It goes something like this:

“An online store shouldn’t have to collect sales tax for a state it doesn’t have a physical presence in because it doesn’t benefit from any of the things sales tax pays for, like firefighters and police. If a store is located in California, why should it collect New York sales tax when that sales tax goes to pay for projects and services in New York?”

This argument would make sense if the online store were paying, not collecting, sales tax. But that’s not the case. It’s the store’s customers who are paying sales tax, and they do benefit from the firefighters, police, libraries, and more that sales tax revenue helps pay for.

Online stores pay taxes wherever they’re located to help pay for the services that their offices benefit from. All that has absolutely nothing to do with whether or not they collect sales tax. Collecting sales tax is—or rather should be—simply part of selling online, just as it’s part of selling on Main Street.

To sum up: The sales tax you pay funds projects and services in your community. That’s as it should be. Collecting sales tax? That’s just part of doing business.


Study says online sales tax collection = more jobs for Speaker Boehner’s Ohio

October 20, 2011

An article in Internet Retailer says that a new University of Cincinnati study found that “retail stores in Ohio would hire 11,000 new employees if a new system requiring sales tax collection by out-of-state online and catalog retailers went into effect.”

We’re not surprised—local stores provide three jobs for every one provided by an online retailer—but we’re glad to see solid figures on just how many jobs would be created if online retailers collected sales tax.

The article includes this quote from Jeff Rexhausen, associate director of research at the University of Cincinnati Economics Center:

“These are very, very significant findings . . . . Given the difficult economic circumstances affecting Ohio’s retail businesses and its state and local governments, finding a way to bring fairness to the online sales tax process would be a huge economic boon to the state.” (emphasis added)

We hope Speaker Boehner (R-OH) and the rest of Ohio’s delegation in Congress are listening. When Congress can create tens of thousands of new jobs and help ensure states have enough revenue for schools, firefighters, and police, all without creating a new tax or raising taxes—why wouldn’t they?


Update on Florida’s push for online sales tax collection

October 17, 2011
Florida

Florida: Striding ahead on online sales tax collection

Florida State Senator Evelyn Lynn (R-7th) and State Representative Michelle Rehwinkel Vasilinda (D-9th) are continuing the fight for online sales tax collection in Florida.

According to this article on WCTV.tv, Vasilinda “has re-filed HB 321—the Streamlined Sales and Use Tax Agreement (SSUTA)—in the Florida Legislature for the upcoming 2012 session” and Senator Lynn re-filed the companion SB 430:

The Representative believes that the passage of her bill would help to resolve projected shortfalls in our state’s budget.

Representative Rehwinkel Vasilinda has also filed House Memorial 323, a resolution that requests the U.S. Congress adopt the Main Street Fairness Act on the national level. Collecting sales tax from Internet purchases has bipartisan support, and Florida State Senator Evelyn Lynn (R-Ormond Beach) has filed a companion bill as well as a Senate Memorial Resolution to Congress on the SSUTA.

In a previous blog post, we pointed to a great Tallahassee Democrat editorial praising Vasilinda. Unfortunately the editorial is now behind a firewall on the newspaper website (a search in the archives for “Pinching the loophole,” the original title of the article, will bring it up if you’re interested enough to pay to read the entire editorial)—but we did quote from it extensively in our post, and you can also read a portion of it on the Stand With Main Street Florida website.

But that’s just one of the posts we’ve written about the huge support for online sales tax collection in Florida. That support comes from business groups, the business-backed think tank Florida TaxWatch, small business owners, and of course, other newspaper editorials.

As our regular readers may recall, we even traveled to Florida in April of this year to attend their Main Street Fairness Day in Tallahassee, where we spoke alongside other Florida businesses in support of the corresponding bills from the Florida legislature’s previous session.

We’re behind Sen. Lynn and Rep. Rehwinkel Vasilinda 100% in their efforts on behalf of Florida. It seems pretty clear that most of Florida’s residents and businesses are behind them, too.


Press round-up on Marketplace Equity Act

October 15, 2011
Press round-up

Press round-up: News on the Marketplace Equity Act

Here’s a round-up of the press coverage on the Marketplace Equity Act, introduced yesterday:

– from Politico, “Online sales tax bill splits community”

– from the National Journal, “House online sales tax bill draws bipartisan support”

– from Internet Retailer, “A new take on web sales tax collection”

– from the Tax Foundation’s Tax Policy blog, “New state online sales tax bill introduced in Congress”

– from Bookselling This Week, “New federal sales tax fairness legislation introduced”


Reuters: State and local leaders on both sides of the aisle ask Congress to close online sales tax loophole

October 4, 2011
Reuters: Strapped states crave bigger online tax bite

Reuters: Strapped states crave bigger online tax bite

We were fascinated by a new Reuters article that focuses on states’ loss of revenue due to uncollected online sales tax.

Among the facts that caught our eye was this tidbit:

On the state level . . . financial pressures seem to have erased partisan division on the issue. Texas’ majority Republican legislature passed its legislation, and California’s measure had support from both parties.

Hoping to bring that cooperation and a sense of urgency on the issue to Washington, local businesspeople, mayors and other officials from states have been lobbying on Capitol Hill. (emphasis added)

We’ve always believed that online sales tax collection is a bipartisan issue—it’s not about creating a new tax or raising taxes; it’s simply about closing a loophole that’s draining states’ abilities to fund critical local services. We’re glad to see that state politicians are willing to forget about partisanship in order to serve the greater good, and we think that even on the federal level, there’s more agreement than not on the issue. Over time, we believe that more and more political leaders on both sides of the aisle will speak out for the Main Street Fairness Act—particularly since the article quotes a spokesman for the Alliance for Main Street Fairness as saying that “between 150 and 200 members of Congress come from states which have recently taken action and would see hometown support for a federal solution.”

The article also includes a quote from Oklahoma City Mayor Mick Cornett, who’s “lobbied extensively for federal action” (and who is, we note, a Republican), that offers some specific figures on what the lost sales tax revenue would have paid for:

Cornett says the $10 to $15 million a year his city loses on uncollected taxes equates to between 100 and 150 firefighters or police. He says he’s making progress arguing that these are taxes already owed, not new taxes.

“Now you find conservatives in Washington who understand this is closing a loophole, it’s not a new tax,” says Cornett.

Most cities are just hanging on, trying to keep the firefighters and police on the street. This is one way Congress can help local governments without it costing them anything.” (emphasis added)

Granted, that figure applies only to Oklahoma City, but it does give us some idea of just what we lose when online retailers don’t collect sales tax. Consider, too, that the 100 to 150 firefighters or police officers that sales tax would have paid for isn’t only a loss to the community, as important as that is. It’s also a loss of new jobs at a time when they are desperately needed. If Oklahoma City had had the $10 to $15 million a year that it’s due in uncollected sales tax, it could have created 100 to 150 new jobs.

The article concludes with a discussion of how sales tax contributes to state budgets:

Nationally, the cost of running local government is rising faster than tax revenue. Sinking property values are hurting real estate tax collections. Stagnant salaries have kept income tax flat in the states which impose one.

Oklahoma’s cities rely on sales taxes for 55 percent of their budget on average. In some places, sales tax covers more than 90 percent of the local budget.

Arkansas municipalities rely on it heavily too, for close to 50 percent of their income from sales taxes. Slack receipts have driven 15 Arkansas cities to institute sales tax increases so far this year, according to the Arkansas Municipal League.

Texas Comptroller Susan Combs calculates that in fiscal 2010, which ended August 31, her state lost $658 million in uncollected sales taxes. Sales tax contributes 55 percent of the state’s total income. (emphasis added)

These figures are revealing, particularly when you consider the fact that sales tax revenue has been declining for the past decade, due mainly to the increase in online shopping. Add up these three facts—sales tax provides at least 50% (in some places, up to 90%) of city or municipal income in Oklahoma, Arkansas, and Texas; sales tax revenue has been declining for a decade; and in this economy, other sources of revenue, such as income tax and property tax, are also declining—and it becomes clear why 15 Arkansas cities had to raise sales taxes this year. If online retailers were collecting the sales tax that’s already due, those increases would not have occurred.

Near the beginning of the article, Mick Cornett, mayor of Oklahoma City, directs a plea toward Congress: “We need help at the federal level. . . . There’s a limit to what we can do [locally].” If Congress is paying attention to what its counterparts at the state and city level are saying, not to mention to the needs of Americans for new jobs, firefighters, and police, the Main Street Fairness Act should pass soon, by a wide margin.


Round-up of recent press on online sales tax collection

October 3, 2011
Recent press

Recent press on online sales tax collection

We’ve been looking at the recent editorials and news articles on online sales tax collection, and we’re encouraged to see that most of them are in favor of it—a position that we’ve long argued to be practical, sensible, and simply right.

From the Tulsa World, “Only fair: Online sales tax is necessary”:

No one likes paying taxes. They are, however, necessary to keep a city and state running. You might not like a sales tax, but you certainly like good roads.

If we’re going to have taxes, it is imperative that everyone pays their share. For years, some shoppers have been skirting local and state sales taxes by purchasing items online that are available locally. That is not fair to those who support local businesses and keep their cities running with local sales taxes. . . .

States and cities . . . need the income that they have coming. Local merchants, who choose to do business here and employ Tulsans and spend their hard-earned money with fellow local merchants and pay their sales taxes, deserve a level playing field. 

From the Bismarck Tribune, “Main Street Fairness Act: A bill to close the sales tax loophole”:

Studies show that states are losing about $23 billion annually in sales taxes. The tax is legally due on purchases but goes uncollected because the seller is not required to collect the tax and the purchaser fails to report and remit the tax due. This situation creates a huge disparity and an extreme disadvantage for our main street retailers who are competing with retailers selling over the Internet or by some other remote means. . . .

The Main Street Fairness Act addresses the issue of fairness and levels the playing field for all retailers. . . .

Cities, counties and state government rely on sales and use tax revenue to provide services to our residents and to build and maintain a high quality infrastructure for the businesses operating here. The Main Street Fairness Act is an important bill for the retail industry and states—it provides for fairness across the retail industry while permitting individual state sovereignty and supporting a fair sales tax system. . . .

The proposed legislation will go a long way to support and encourage growth in our local North Dakota businesses along with main street retail industry across the country. We encourage Sens. Kent Conrad and John Hoeven and Rep. Rick Berg to sign on to the legislation and support it when it comes up for a vote.

From the Detroit Free Press, “Online sales tax collection rules would level playing field and add funds to state”:

Main Street retailers, the backbone of America, stimulate local economies, build communities and provide good, stable, local jobs. In July retailers added 26,000 jobs to the national economy.

However, these jobs are being threatened by online retailers fighting to preserve an unfair price advantage of 6% over brick-and-mortar stores in Michigan. . . .

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. . . .

Many consumers are often unaware that the tax on online and catalogue purchases already exists. When an online retailer fails to collect the sales tax, it falls to the consumer to report that tax directly to the state, which is often not done.

The Center for Business and Economic Research estimates that this year Michigan will lose more than $125 million in revenue due to the Internet sales tax loophole. As legislators grapple to fill budget gaps, this revenue 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.

States have been compelled to take action in the absence of a national approach to sales tax collection. But a possible solution is the Main Street Fairness Act, introduced in Congress in July. The bill is designed to grant states the authority to set up a simple and equitable system of tax collection on remote sales and, ultimately, the ability to collect these taxes at the point of purchase. . . .

We need a 21st Century framework to ensure a marketplace that benefits online retailers in addition to brick-and-mortar retailers, who provide good local jobs, support our communities and drive America’s economy.

Our country is overdue for a national solution to the issue of sales tax collection.

From Gazette.net (Maryland), “Inaction on Internet sales tax hurts states”:

For Maryland, collecting sales tax on Internet purchases could yield additional revenue estimated to be in excess of $200 million annually, which the state sorely needs to bring budgets into balance given the lagging condition of our local economy and continued structural deficit.

Without this revenue, which is rightfully owed to the state, programs such as Medicaid, K-12 education and our transportation infrastructure needs will be unmet without additional tax increases. . . .

More importantly, though, such a policy change would level a slanted playing field for bricks and mortar retailers who invest in our local communities and currently charge and collect taxes on sales via the Internet. . . .

Moving forward . . . our federal representatives and Congress as an institution should end this debate and do what’s right for state governments and more importantly for countless mom-and-pop retailers that serve as the backbone of our nation’s economy.

From the Midland (MI) Daily News, “Local businesses like proposed Internet sales tax legislation”:

Legislators hope a newly proposed online sales tax bill will equalize what they consider an unfair playing field between Web retailers and small businesses. . . .

Michigan would save up to $141.5 [million] in lost sales tax revenue if the [state] bill becomes law, improve sales at brick-and-mortar retailers by as much as $126 million and create up to 1,600 jobs, according to a report from the Lansing-based Public Sector Consultants.

Jerry Meier, owner of Meier Camera Shop, 122. W. Main St. in Midland, said he cannot believe the state has chosen to miss out on those tax dollars for so long.  “We’ve wondered about this for some time. I think it’s going to make a difference,” Meier said. “Everyone says ‘buy local,’ but when it gets right down to it, they look at (online retailers) as an advantage.”

A 6 percent disadvantage when it comes to sales taxes makes a large difference in the long run, he said. . . .

“Legislators we’ve talked with understand that a sale is a sale is a sale regardless of where it takes place,” said Tom Scott, senior vice president of the Michigan Retailers Association. “Government should not be picking winners and losers by favoring one type of retailer over another — especially when it’s our hometown Michigan retailers who are being hurt by the current situation.”