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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.

  • camobabe

    And the People’s Socialist Democracy of Maryland has before its legislature (for real) a bill to tax the homeowners pf that state for sunshine, basing the tax on a formula of multiplying the square footage of a house and the size of the lot and the number of days in a year when the sun causes temps to rise above specific temp levels and humidity levels, on the premise that man planted flora such as grass, shrubs, flowers, etc., plus reflective traits such as adhere to buildings, roofs, driveways, and streets combine to require governmental services such as road and steet maintenance, sewer system degredation/replacement, and any other current or future problems. Call it a “sunshine tax”. One of the bodies of the legislature has already voted to approve (Dumb-O-Crat maajorities in both bodies) and the Domb-O-Crat governor has sated that he will sign the bill into law.

    Can a tax to pay for the air we breathe be long in coming from Marx Dayton and the DFL legislature?

    • Walt Henry

      I love corn based, sugar coated, puffed, dry cereal for breakfast and any time other I want to snack. Make no mistake, I strongly support the right of farmer’s to grow corn because I enjoy corn. Did you know, and here’s one of those “pesky” facts) the average yield on a acre of corn in Iowa in 1960 was 63.5 bushels per acre and in 2009 it was 187.0 bushels per acre? Did you know (“pesky” fact again) if you measure the humidity in a corn field and in a city, the humidity will be higher in the field? Did you know (“pesky” fact) on days when the wind is predominately from the south the water in the air in Minnesota tends to be higher, especially during peak growing season? On those days I run my air conditioner a little longer and that (pesky fact) costs me money.
      So the trade off seems to be I need to spend a little more money to stay comfortable so I can buy my corn cereal. (How I wish my mind would not see complicated things are complicated.)
      But to the point of the editorial–I strongly support leveling the playing field and protecting jobs of Minnesotans by creating laws that allow for the collection of sales taxes on out of state internet purchases.

      • camobabe

        So, you are willing to impose new taxes on the online services in Minnesota? Thus raising the ultimate cost to the consumer, and prodding some of them to find an alternate (and less expensive) seller? Of course that will cause some of the employees of MN based online merchants when their sales dwindle, but, what would you care as long as you get your cornflakes and lil Marky Dayton gets our state closer to bankruptcy?

        Better yet, move to Iowa and get closer to the flakes.

        • camobabe

          Oops!. Meant to say that will cause the loss of jobs for some employees for some MN based online merchants……

          • Walt Henry

            Camilla, your comments are meant to be tongue in cheek, right? Congress is again considering a bill to make it possible for sales tax to be collected regardless of the state in which the sale is transacted. The Senate will vote on May 6th and passage is likely; the House sees this as a tax increase and may not pass this. ($23 Billion in sales taxes are lost to state coffers by the current practice. If we could collect Minnesota’s share maybe we could lower the property tax increase the MN-GOP forced on us last year.)

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