‘Marketplace Fairness' Online Tax Waits for Congress

by Luke Jones  on Monday, Oct. 21, 2013 12:00 am  

From left, Robert Coon, Randy Zook and Chris McMillen

“Some states with strongly conservative leaders, like Wisconsin and Ohio, have already taken steps at the state level budget process,” said Robert Coon, spokesman for the Arkansas Alliance of Main Street Fairness. “They’ve said, ‘Hey, if Congress passes this bill, we don’t want to see taxes increase. So we’re going to capture any increases in state sales taxes paid by people making online purchase and offset with [reductions in] personal income taxes.’ So if it’s revenue, they’ll use that revenue to enable tax cuts.”

The proposal has been lauded by many Arkansas business leaders and brick-and-mortar shops.

“The current rules are a de facto effort by the government to choose winners and losers, and it is tilting the table unfairly to the advantage of the Internet retailer at the very real cost to the brick-and-mortar retailer,” Randy Zook, president of the Arkansas State Chamber of Commerce, said in 2012. “We think that is something that is unwise and needs to be corrected, and time is of the essence.”

Coon also said the bill would have a monetary benefit in the state. It’s expected to collect some $24 billion in previously uncollected sales taxes among the states that levy them.

Arkansas collected $2.1 billion in sales tax for its fiscal year that ended June 30, which was an increase of $22.5 million from fiscal 2012.

Most recently, U.S. Rep. Bob Goodlatte, R-Va., chairman of the House Judiciary Committee, issued in September a list of principles that the Internet sales tax should have:

Principles for an Internet Sales Tax Law
Presented by the House Judiciary Committee, Sept. 18.

  • Tax relief: Using the Internet shouldn’t create new or discriminatory taxes not faced in the offline world.
  • Tech neutrality: All businesses should be on equal footing in terms of sales tax collection.
  • No regulation without representation: Those bearing unfair regulatory burdens should have avenues to protest them.
  • Simplicity: The law should be simple enough so compliance can be inexpensive and render small business exemption unnecessary.
  • Tax competition: Federal governments should be encouraged to compete to keep tax rates low.
  • States’ rights: States should have the ability to choose their participation in the law.
  • Privacy rights: Sensitive consumer data should be protected.

“That was a pretty big step for getting it back in the House,” Coon said. “A lot of what he’s got in there are things already in Womack’s bill. We want to work through this process and Chairman Goodlatte provided a great opportunity to get this thing rolling again.”


The bill isn’t in the clear, though.

“The retail industry has the Christmas and holiday season coming up, and they’d love to have some resolution by then, but it’s a marathon, not a sprint,” Coon said.

Coon said the bill has encountered some misconceptions on how it would be applied. For example, some balk at the idea that a new tax requirement would be leveled at states. But the law gives states the choice to require it — or not.



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