If you had a choice between paying $105.10 for an item at the store down the street, or $100 from an online shopping site, which would you choose?
Logically, that’s an easy one. But it’s a hard pill to swallow if you’re the operator of a brick-and-mortar store down the street, obligated by law to collect state sales tax, and that $100 sale is going to Amazon.com or aother online retailer which, till recently, didn’t collect sales tax.
But that tide is turning. We believe in fair competition, so we think it’s about time.
It’s no small amount of money at stake: Amid the too-slow growth of our nation’s economy — the U.S. Commerce Department reported last week that retail sales declined in June for the third straight month — one of the few bright spots is continued growth of “nonstore” sales. That’s a category that consists mainly of online purchases.
E-commerce sales now account for 9 percent of retail purchases, The Associated Press reported.
It’s not just online giants like Amazon, an established name since the mid-1990s. Wayfair.com, which sells products ranging from baby strollers to decorative pillows, reported sales of more than $500 million last year, the AP reported.
Many of those online retailers have, no doubt, been boosting those sales by not making customers pay sales tax.
Amazon, eBay and Overstock.com and other online retailers take advantage of a 1992 Supreme Court ruling that companies selling online don’t have to collect sales taxes if they lack a physical presence in the state where the customer lives, the Wall Street Journal reported. But that was in 1992, when online shopping was a fledgling, not the $200 billion annual business it is now.
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The sluggish economic climate has put a serious strain on state budgets, and that fact has persuaded Republican governors to join their Democratic counterparts in insisting that Amazon and other online giants play fair.
As late as February, at a meeting of the Republican Governors Association, reaction to collecting online sales tax was “cool,” the Wall Street Journal reported. Leading conservative governors such as Louisiana’s Bobby Jindal were worried that the effort to collect such tax sounds like a new tax. Which, of course, is not something Republicans are generally inclined to do.
New Jersey Gov. Chris Christie has endorsed a bill before Congress to allow states to compel online companies to collect sales taxes. This, of course, was after he made a deal for the collection of his state’s sales tax in exchange for Amazon locating a distribution facility in his state.
But having a prominent conservative governor get behind the idea — thus, providing political cover to his fellow Republicans, easing potential worries about outcry from the tea party that taxes are being raised — makes federal action more likely. Making online retailers play fair is one of the few ideas with bipartisan support these days.
“Conservatives don’t want to pick winners and losers” in business, said Sen. Lamar Alexander, R-Tenn., the former Tennessee governor. “And our bill gives states the right to tax the online purchases. It’s states’ rights.”
Another co-sponsor, Sen. Dick Durbin, D- Ill., said: “It gets down to a basic issue … of simple fairness for small businesses that create jobs and opportunities all across America. And with the sales taxes they collect, they provide for local police and firemen, for the sewers and streets.”
These days, we’ll take whatever bipartisanship we can get. Especially if it turns an unfair fight into a fair one.