Its not unusual, Roddey Player says, for would-be customers to walk into one of his Queen City appliance stores, check out various models and prices, and walk out. Their next stop? The Internet, where they can buy the same product without paying the 7.25 percent sales tax Player has to charge.
Americans spent $343 billion on e-commerce in 2012, and that number is growing quickly. They paid almost no sales tax on those purchases, even though the law requires that most of them do. Thats costing bricks-and-mortar retailers like Player significant business.
We can compete on price. We just cant absorb that sales tax, Player told the Observer editorial board Wednesday. This would just create a level playing field so the brick-and-mortar retailers can be more competitive.
The U.S. Senate could vote as soon as today on a bill that would make things fair for job creators like Player. The Marketplace Fairness Act would allow states to require online retailers to collect sales taxes on purchases made by residents in their states. That could amount to $10 billion to $20 billion a year nationally; for North Carolina, it could mean about $200 million a year in tax revenue.
These are not new taxes, mind you. These are taxes online shoppers are already required by law to pay. But online retailers like Amazon generally dont collect sales tax, and shoppers, not surprisingly, dont voluntarily send it in. So the Marketplace Fairness Act would just enforce collection of taxes that are already on the books.
The bill is expected to pass with bipartisan support in the Senate. It would then move to the House, where Charlotte-area Reps. Mel Watt, Robert Pittenger and Richard Hudson should stand up against Grover Norquist and for N.C. businesses and the jobs they create.
Why wouldnt they? Here are some arguments theyll hear, and a better response:
• Dont burden consumers with new taxes. These arent new taxes. They are existing taxes that online retailers choose not to collect.
• Dont burden small online businesses. The legislation exempts businesses with less than $1 million in out-of-state sales. So the craft-maker at home has nothing to worry about.
• This would impose a huge administrative burden on online retailers. A) Its the cost of doing business. Ask your local retailer. B) The bill requires states to provide retailers software that calculates the tax owed by their residents. C) States would also be required to streamline their tax systems to make things easier on the retailer.
• Dont force retailers to pay taxes to states where they dont use public services. The retailer is not paying taxes. The consumer is paying the taxes; the retailer is just collecting them. (And besides, the retailer uses our roads to deliver their products, and our landfills house their boxes.)
Simply put, the Internet has revolutionized the way people shop. Sales tax collections, though, have not kept pace. The result: An unfair system to Roddey Player and all the other local retailers who create jobs here. Congress should fix it now.
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