Fairness on taxes

The movement to level the playing field in the competition between online and brick-and-mortar retailers took a big leap forward Monday (May 6), when the U.S. Senate passed a bill requiring large online retailers to collect state sales taxes on purchases.

The bill, called the Marketplace Fairness Act, was a rarity in this dysfunctional Congress—a measure that appealed to lawmakers on both sides of the aisle. So many Republicans joined the majority Democrats that it passed by a lopsided margin, 69-27.

The bill now goes to the Republican-dominated House, where it faces an uncertain fate. That’s because opponents, in an attempt to appeal to the Republican majority in that chamber, are characterizing the bill as a tax hike, even though it is nothing of the kind.

It’s important that our representative, Doug LaMalfa, understand just what the bill would do, since his vote could be crucial to its passage. Simply put, it would close a huge loophole that unfairly gives online retailers a competitive advantage ranging from 5 percent to 10 percent over their brick-and-mortar competitors.

As it stands, state sales taxes are already legally due on online purchases that would be taxable if purchased in a store. However, online retailers are not required to collect the taxes. Customers are supposed to send the money to the state, but nobody does that, at a cost of $11 billion annually in lost tax revenues.

Not only is this unfair, it is deeply detrimental to Main Street retailers, who are struggling to survive in the face of multibillion-dollar companies like Amazon that enjoy volume purchasing advantages as well as the sales-tax edge.

The Marketplace Fairness Act would require online retailers with more than $1 million in out-of-state business to collect the sales taxes and send the money to the states, just as Main Street retailers do. It’s a matter of fairness and plain common sense, which is why so many Republican lawmakers have supported it.