Guest: Tax online and in-store sales equally with Marketplace Fairness Act
Congress needs to pass the Marketplace Fairness Act to ensure fair competition for online and physical stores, writes guest columnist Sherry Lawson
Special to The Times
Congress needs to pass the Marketplace Fairness Actso there is real and fair competition reflecting 21st century commerce. America was built on promoting economic growth and business in a fashion that ensures fair competition for all.
Today, online-only retailers are not required to charge and collect sales tax while local businesses must. However, the sales tax (in all but five states) is still owed.
The collection of these taxes is difficult to enforce unless online sellers have either a physical store or a warehouse within the state.
When sales tax is not collected at the time of purchase, the burden falls on the consumer to report and pay. Compliance is virtually nonexistent. Based on a recent Ohio State University study, states are estimated to lose $23 billion a year from uncollected sales taxes on online goods.
The current sales-tax code is confusing for consumers and companies. For example, Amazon.com is now legally required to collect sales tax in 21 states, including the four most populous: California, New York, Florida and Texas.
The Marketplace Fairness Act is not an additive tax. It’s about ensuring all companies, regardless of the type of business, pay the same taxes.
The tax disparity puts local businesses at a significant economic disadvantage and stifles the overall economy. According to a July 2013 study conducted by Arthur B. Laffer and Donna Arduin, federal legislation that would allow states to close the online sales-tax loopholes would result in a more efficient tax system, a larger tax base and lower tax rates for all taxpayers. This would increase states’ prosperity and employment, increasing gross domestic product by more than $563 billion and adding more than 1.5 million jobs in the next 10 years.
It is time for Congress to grant states the ability to correct the unfair application of sales-tax laws.
How would the Marketplace Fairness Act impact our community? Westlake Center is one of the top shopping and tourist attractions in Seattle. The center contributes more than $7.1 million annually in property and sales taxes that pay for public services such as law enforcement, fire department, education and other services.
Passage of the Marketplace Fairness Act would allow Westlake Center and other brick-and-mortar retailers to compete fairly with online retailers. Brick-and-mortar retailers are the economic engine that drives the local economy.
The Marketplace Fairness Act passed the U.S. Senate in early May 2013 and is currently under consideration in the House. U.S. Sens. Patty Murray, D-Wash., and Maria Cantwell, D-Wash., both supported the bill in the Senate.
Passing the act is simply about enforcement of current tax law. Whether you shop at a store or online, taxation should be fair.
Sherry Lawson is general manager of Westlake Center.