Online sales tax
Brick-and-mortar retailers should not be penalized
The effort to tax purchases made online from another state has been more than a decade-long challenge for communities that care about their own Main Avenue retailers.
The couple of percentages points in sales tax that online retailers do not have to collect puts bricks-and-mortar retailers at a disadvantage. Not a large disadvantage in many cases, but a disadvantage nevertheless.
When it comes to taxation, it is consistency that is critical.
Originally, major online retailers with an out-of-state location that served most or all of the country were a novelty, and their advocates claimed that exempting them from purchasers’ state sales taxes was needed to foster their expansion. For some time now, that tax-free boost has not been needed.
Instead, Main Avenue businesses have all along deserved a level field. There are signs of progress on that front.
Last week, the U.S. Supreme Court declined to hear an appeal to a decision by New York state’s highest court that online purchasers have an obligation to pay New York sales tax. That now allows New York to collect, as best it can, sales tax on online purchases made by New York residents.
Other states, including Colorado, have undertaken the same tax-collection effort.
But there is a good argument that what is needed is a federal mandate to require those state sales taxes to be collected by retailers as occurs at brick-and-mortar stores, not a state-by-state solution, which, so far, is aimed at tagging purchasers.
Amazon, which, with its expansion into the marketing of so many diverse products, may eventually be the next Wal-Mart, has taken that position and argued for a federal law. It claims it wants to avoid the vagaries of state-by-state requirements, and opposed New York’s law.
In Washington, the Senate has shaped legislation to allow states to collect online sales taxes. But the House, not surprisingly, given its majority’s anti-tax stances even when the taxes have some logic behind them, has been less than enthusiastic on the topic.
A couple of years ago, it was argued that tracking what state was owed what was too technologically difficult; that was rightly, and quickly, shouted down.
The dollar volume of nationwide retail sales the day after Thanksgiving was up slightly, but with fewer purchases. On the next Monday, a day singled out to promote online sales, volume was up 15 percent.
This is not about taking aim at online retailers, it is about a level field. Congress should provide the framework that allows the states, if they wish, to require online retailers to collect and pay appropriate sales taxes. Those retailers rely on websites, email marketing and online payment plans; they know how to develop the necessary collection and payment systems. It is all about fairness.