Closing sales tax loophole a good idea [UPDATED]Published 9:32am Friday, April 26, 2013 Updated 11:42am Friday, April 26, 2013
Ever since the days when it was still called the World Wide Web, the internet has provided a mechanism for large sales organization to out-compete not only smaller retailers but even large ones that operate from an actual store — in part because on-line sellers usually do not collect the sales tax that shoppers would pay if they made a purchase in person.
Finally, Congress is getting serious about giving states the power to close that loophole, and it’s about time.
As much as we dislike the idea of new taxes or expanded taxes, it’s clear that creating a mechanism that would require on-line retailers to collect sales tax and pay it to shoppers’ home states would be a good thing.
Retailers who operate physical stores pay property taxes to the cities where they’re located, they provide jobs in the cities where they’re located and they serve as magnets for other economic activity in the cities where they’re located.
In short, they not only collect sales tax according to state laws but provide many other benefits. Most online sellers don’t. This disparity ends up creating a net loss not only for businesses but also for the communities and states who lose out on taxes, jobs and more.
The simplest solution is for sales tax to be collected in accordance with state laws, whether a sale is made digitally or in person. There is a lot of pressure from some giant, national retailers designed to keep Congress from giving states this authority, the main argument being that it’s difficult to administer sales tax on-line. We’re confident, however, that the geniuses who run major retail web sites can figure out this minor technical detail.
The internet has tilted the retail playing field a long ways during the past 20 years. It’s time to level it a bit.