It's time to level the playing field.
Calling for sales taxes on the weekend that includes Black Friday and Cyber Monday is a little like walking into a Boston sports bar full of Patriots fans and yelling "Go, Broncos!" But at least in football there's a level playing field.
OPPOSING VIEW: Internet sales tax would level start-ups
Not so for online retailers and the Main Street stores they compete with. Unless a Web vendor has a physical presence in a state, it can sell to customers without charging state and local sales taxes. That can save buyers up to 7.5% in state taxes alone, a nice leg up for online sellers.
But it's deeply unfair to physical stores that are already struggling with a shorter Christmas shopping season and a lackluster economy. The fact that so many Black Friday sales began on Thanksgiving this year is a barometer for how desperate some retailers have become to snag customers.
There was a time when giving online sellers a tax break was a reasonable way to nurture a fledgling industry, but that time passed long ago. E-commerce is now a quarter-trillion-dollar-a-year juggernaut that can more than fend for itself.
At least one house of Congress grasps that. In a strong bipartisan vote last May (21 Republicans joined 46 Democrats and two independents), the Senate moved to let states require online sellers with more than $1 million a year in revenue to collect sales taxes in all states, just the way physical stores have to.
But the measure is stuck in the House, where tired and almost entirely bogus arguments are being used to smother it:
"It's just too burdensome for online businesses to figure out which tax to charge, because there are almost 10,000 different state and local taxes." Answer: That's what software is for. Big online sellers with stores in all or most states already do it. Meanwhile, enterprising start-ups will calculate sales taxes for free and integrate with a seller's online shopping cart.
"Requiring Internet sellers to collect sales taxes would give states with sales taxes vast new powers to bully small online businesses in other states by threatening audits." Answer: The Senate's $1 million threshold exempts truly small businesses. And state tax authorities typically have plenty to do in their own states without threatening abusive audits elsewhere.
"This would be a new tax." Answer: That's like saying that anytime someone has to pay a tax they've been evading or avoiding, they're being hit with an unacceptable new tax burden. No, it's simply requiring companies to collect, and buyers to pay, their fair share under long-standing tax laws.
Not only are brick-and-mortar stores the losers here, so are states and localities that need sales tax revenue to fund their operations. Altogether, uncollected revenue from cross-border Internet, catalog and TV sales amounts to an estimated $23 billion a year.
Opponents have cleverly cast this as a war on struggling little online businesses, but a modest exemption would protect the smallest businesses, and over time, software and streamlined tax laws could make even that unnecessary.
The real issue is fair competition.
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