Calls for Sales Tax Fairness Increase as Congressional Session Nears End

With the 112th Congress set to conclude at year’s end, an increasing number of newspaper editorial pages have been urging the passage of federal sales tax fairness legislation. And while odds are diminishing that the Marketplace Fairness Act (S. 1832) — a bill that would give states the authority to require remote retailers to collect and remit sales tax — will be passed before the New Year, it is clear from the growing chorus of editorials and op-eds that sales tax fairness will be heading into 2013 with strong momentum

On December 9, the Wall Street Journal [1] [1]published an op-ed by Washington Gov.  Christiane Gregoire and Sally Jewell, president and CEO of the retailer REI, regarding the “real-world cost” of online shopping. In the op-ed, Gregoire and Jewell wrote: “Washington [D.C.] can also choose to stand up for Main Street and help state and local governments strengthen their balance sheets by closing the Internet tax loophole.

“The problem doesn’t arise solely when people search for supposedly tax-free deals online,” the op-ed continued, “‘Showrooming’ is also increasing. Imagine a customer who walks into a sporting-goods store and asks for help in buying the coolest new running shoes. An attentive salesperson spends half an hour with the customer to find the most comfortable fit, the best performance, and the right price. Just as the salesperson thinks she has found the ideal pair, the customer decides to make the $100 purchase via smartphone from an online competitor who doesn’t charge sales tax.”

The authors noted: “[W]e aren’t alone in calling on Congress to act. Traditional retailers, ‘clicks-and-mortar’ firms, and even Amazon support federal legislation that would empower states to require out-of-state businesses to collect and remit sales taxes.”

South Dakota Gov. Dennis Daugaard also called for Congress to act in his December 6 op-ed, “Need more taxpayers, not more taxes [2],” published in the Custer County Chronicle.

“Cyber Monday (November 26) was the date on which online retailers offered large discounts and dramatically boosted their sales,” the governor wrote. “Each year, Cyber Monday sets a new record for money spent online in a single day. This year was no different, with some analysts estimating more than $1.5 billion spent during the 24-hour period. I expect the trend held true in South Dakota as well.

“The 2012 Cyber Monday gift-buying binge also likely broke another record: most purchases made in South Dakota without paying sales tax.”

Gov. Daugaard concluded: “We need Congress to act, and I support Congressional efforts to simplify and standardize remittance of sales taxes collected from online purchases. It creates an even playing field for our local businesses and increases tax revenues the right way — by adding more taxpayers, not more taxes or higher rates.”

In the editorial “Collect sales tax on Internet, by-mail and in-store purchases, [3]” DuBois, Pennsylvania’s Courier-Express wrote: “Congress should pass a statute giving states the authority to collect sales taxes incurred via online purchases — as long as those are the same taxes as are collected by bricks-and-mortar stores. Taxes should apply across the board, to postal mail purchases, or private-delivery (FedEx, American Express) purchases as well. It’s the product or service that should determine whether the tax is collected, not the method of purchase. We’re interested in fair taxes.”

The Metrowest Daily News [4]in Framingham, Massachusetts, urged Congress to level the playing field for Main Street retailers out fairness and a concern for jobs in its editorial: “Close the online sales tax loophole.”

“Online retailers set another record on Cyber Monday, racking up $1.45 billion in sales, thanks to that advantage and a competitive edge that has driven shoppers to their computers from the beginning:  the lack of a sales tax,” the editorial reported. “Business owners with physical locations — who provide jobs, pay taxes, and support the community — aren’t the only ones hurt by the trend toward online sales. State Treasurer Steven Grossman estimates the state missed out on $387 million in sales tax revenue in 2011 because of the loophole.”

KARE11.com [5]in St. Paul, Minnesota, reported that support for sales tax fairness is growing. “Both Minnesota’s U.S. senators are backing the Marketplace Fairness Act, a bill receiving bipartisan support as more and more states see potential sales tax revenue being lost to e-commerce,” the article noted. “‘In 2011 we estimate we lost about $400 million dollars in sales tax revenue to people who are buying on the internet from out of state retailers,’” said Myron Frans, Minnesota commissioner of revenue.”

Michigan state Rep. Eileen Kowall and state Rep. Jim Ananich wrote a guest column [6]on MLive.com urging the state to pass affiliate nexus legislation (see related story [7]) that the two representatives say would level the playing field for Michigan’s Main Street retailers.

“Michigan businesses and workers can compete and succeed with anyone in the world, which is why we introduced House Bills 5004 and 5005 [8] to level the playing field and require online retailers to collect sales tax from customers for purchases,” Kowall and Ananich said. “Without passing this legislation, online retailers will continue to have a competitive advantage over our local retailers, hindering our retail industry and keeping retailers from hiring more employees and expanding their operations.

 “During this holiday season, no one would imagine sneaking into their neighbors’ home and stealing presents, but that is essentially what these online sites are doing by using this loophole to cut into sales of workers and business owners who work hard to earn their living. The need to close this loophole became even more apparent as an estimated 40.7 percent of Black Friday shopping was done online, according to USA Today.”