United States senators are continuing the oftentimes heated debate over online sales tax for states – to pay, or not to pay?
To address the ongoing issue, senators Mike Enzi (R-Wy.), Dick Durbin (D-Ill), Lamar Alexander (R-Tenn.) and Heidi Heitkamp (D-N.D.) recently introduced the Marketplace Fairness Act of 2017. The Senate approved a previous version in 2013, but that bill never received a vote in the House.
Either way, Enzi and the other senators contend the legislation would give states the right to collect the sales and use taxes they are owed under current law from out-of-state businesses or online retailers.
"The Marketplace Fairness Act is about supporting jobs and services we have in our towns, while ensuring states have the ability to collect taxes they are owed – if they choose to," Enzi recently pointed out in a press release. "Right now, thousands of local brick and mortar businesses are forced to do business at a competitive disadvantage because they have to collect sales and use taxes – and remote sellers do not. This legislation promotes Internet fairness by putting Main Street businesses on a level playing field with online retailers. In 2013, the Senate passed this bill with bipartisan support. It's time to give states the right to enforce their own laws – without having to get permission from Washington."
The National Retail Federation (NRF) welcomed the new online sales tax push, maintaining that Congress has waited far too long.
"With more states passing sales tax laws or going to court, pressure is building on Congress to finally address this issue," NRF Senior Vice President for Government Affairs David French stated in a press release. "The states know they can't fix this on their own, but they agree with retailers that Congress has stalled for far too long. Online sellers should not continue to receive an unfair price advantage."
NRF is the world's largest retail trade association, representing discount and department stores, home goods and specialty stores, Main Street merchants, grocers, wholesalers, chain restaurants and Internet retailers from the United States and more than 45 countries. Still, center-Right organizations – including the National Taxpayers Union (NTU) – are not on board.
"Marketplace Fairness Act is a pretty lousy bill," asserted NTU Vice President Brandon Arnold. "It is not fair – that's for sure – and I think, if anything, it hinders the marketplace … at least the free market of goods, rather than augmenting it or removing regulations."
Arnold then explained exactly how this works.
"Basically, what it does is it provides out-of-state tax collectors the ability to reach over state borders and allows them to collect sales taxes on interstate commerce," Arnold explained. "That is a bad thing – both just from a top level viewpoint. But also, the more you drill down and look at the details, all the requirements and burdensome regulations that are going to be placed on small businesses – it becomes an absolute disaster."
Arnold acknowledges that the latest version of the Marketplace Fairness Act is bipartisan, but he believes that the reason is because the bill gives states the ability to bring in new revenues without technically raising taxes.
He was then asked about big box retailers – and why they are not supporting this bill?
"They're already collecting sales taxes on interstate transactions but their smaller, more nimble competitors oftentimes are not because they're not required to by law,” the business expert reasoned. “So, because they're not doing it, they see themselves losing business – especially on higher-dollar items where that six- or seven-percent sales tax can add up to a decent chunk of change. They feel like they're being undercut by their smaller competitors, so this is like a big business regulatory play to try to effectively gain a leg up over their smaller competitors.