Editorial: Time for Congress to act on Marketplace Fairness Act
Cyber Monday once again chalked up record sales. The Monday after Thanksgiving is generally viewed as the biggest day of the year for online retailing, as tech savvy consumers hit the Internet to work on their holiday shopping lists. Preliminary reports estimated sales were up as much as 17 percent from 2012, USA TODAY reported.
Convenience and extensive inventory are big factors in the growth of online retailing, but the industry also has been aided by a maze of laws and court rulings that give online merchants an unfair tax adva ntage .
While legislation in some states requires sales tax be paid on some online transactions, most sales are still untaxed. In many states that translates into a 5-10 percent price advantage for the online vendor. But it also is a 5-10 percent disadvantage for local brick-and-mortar stores that not only collect sales taxes, but also pay property taxes, employ local residents and support local causes.
Last week, the U.S. Supreme Court refused to rule on a decision in New York that forces online vendors to remit sales tax the same way in-state businesses do. That could encourage other states to expand their laws, but the better solution is for Congress to pass the Marketplace Fairness Act, which would provide a standardized approach across the country.
The act would require out-of-state online, catalog retailers or “remote sellers” to collect sales tax at the time of the transaction, just as local retailers are required to do. But to get that authority, each state would have to simplify their sales tax laws, so it would be easy for the national vendors to calculate and manage.
Some national vendors, such as Amazon.com, support the legislation because it would bring consistency and clarity to the current hodgepodge of laws across the country. But just as importantly, it would finally level the playing field for local merchants, who contribute to our communities in so many ways.
The change would also help states governments that have gradually seen sale tax revenue slip away. A study by the University of Tennessee estimates the loss to states in 2012 was about $23 billion. Shoppers might not care about that, except that states will be looking for other ways to recoup that revenue to provide the services taxpayers have come to expect.
There is no question that the Internet has changed the way many of us shop, but in the end, we think most consumers would like the option of buying from local stores as well as buying online. A fair tax system is an important part of making sure our Main Street businesses have a fighting chance.
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