Journal Times editorial: Online sales tax is fair

Journal Times editorial: Online sales tax is fair

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Last July, we urged passage of legislation requiring that online retailers charge state sales tax, so as to level the playing field between online retailers — some of whom have set up headquarters in states without a sales tax — and Wisconsin brick-and-mortar retailers, who are legally required to tax purchases.

We’re pleased that on May 6, the U.S. Senate passed a bill with the objective of making it easier for states to collect sales taxes for online shopping.

In 1992, the U.S. Supreme Court ruled that states could only require businesses to collect sales tax if the business had a physical presence in the state. Out-of-state retailers didn’t have to collect because it was deemed too difficult to abide by so many different tax jurisdictions and rules.

Do you remember the computer you used at work or owned in 1992? They’ve gotten quite a bit better since then, as has the software. The Marketplace Fairness Act would require online businesses to comply with the same rules as bricks-and-mortar counterparts. The act also would require states to simplify their tax codes and provide retailers the software to assist in tax collection at no charge.

The Marketplace Fairness Act would require online businesses to comply with the same rules as bricks-and-mortar counterparts. The act also would require states to simplify their tax codes and provide retailers the software to assist in tax collection at no charge.

The bill appears to face an uphill climb in the House, however. House Speaker John Boehner, R-Ohio, said Tuesday that the legislation would impose too much of a burden on small Internet retailers.

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“I just think that moving this bill where you’ve got 50 different (state) sales tax codes, it’s a mess out there,” he told Bloomberg Television. “And what you’re doing is you’re going to make it much more difficult for online retailers to be able to comply.”

We think the speaker should have more regard for brick-and-mortar retailers in his home state. If an Ohioan buys needle-nose pliers at Amazon.com, thus avoiding Ohio’s sales tax, instead of paying the same retail price at a hardware store in his or her own town, does that not hurt Ohio businesses and Ohio’s ability to deliver government services to its residents?

As for making it “much more difficult for online retailers to be able to comply?” Many are finding it all too easy to not comply. USA Today reported last week that estimated uncollected taxes on online purchases in 2012 totaled $11.4 billion. Uncollected online sales tax cost Wisconsin $142.1 million.

While this is a matter of fairness, it is also new taxation. Generally, when something like this happens, it becomes a blank check to raid for more government spending. Rather than have that happen, we’d like to see the imposition of online sales tax in tandem with a lowering of the sales tax rate for retailers — online, and brick-and-mortar — so this doesn’t turn into a piggybank for more government spending.

Online shopping provides the convenience of finding exactly what you want from the comfort of your own home, or wherever you choose to use your laptop, tablet or smartphone. It lacks the personal relationship between retailer and customer of a local business, but consumers are free to make that choice.

But we live and work in Wisconsin. We think our neighbors’ businesses should compete for our dollars, but we also think the playing field on which they compete should be level.

That means a Racinian’s purchase online should be taxed the same as a Racinian’s purchase on Washington Avenue.

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