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Hit ‘send’ on e-tail sales tax
Goodlatte should use his committee chairmanship to help push through legislation allowing states to collect taxes due on out-of-state sales.
Sunday, March 3, 2013
As new chairman of the House Judiciary Committee, Rep. Bob Goodlatte will be at the center of debate on some of the biggest, most contentious issues likely to come before Congress this year — immigration reform and gun control, to name two.
Before he goes there, Goodlatte should resolve a far more mundane issue: e-tail sales tax equity.
Allow states to require that online businesses collect whatever sales taxes are due them, just as brick-and-mortar businesses must. As the law stands, Internet retailers don’t have to unless they have a physical presence in a state.
Bills to address that quirk have languished in Congress for years. But supporters say a version introduced last month and now before the Judiciary Committee, the Marketplace Fairness Act of 2013 (HB 684), has momentum on their side.
A bipartisan group of 53 members from both houses of Congress signed onto the legislation, which reconciles differences between bills filed last session in the two chambers. And, after a decade of e-commerce growth, much — though not all — of the tech industry’s opposition has cooled or turned to outright support.
Still, passage is not a slam dunk: eBay continues to object, saying calculating varied taxes for the myriad taxing districts in different states will be too hard for small entrepreneurs. Many conservatives in Congress remain opposed. And Goodlatte, while not totally unsympathetic to the bill’s intent, says he still has strong concerns. For one thing, he wrote last week in an email, “While it attempts to make tax collection simpler, it still has a long way to go.”
If so, Goodlatte should be prescriptive in explaining how to get it there.
Congress needs to act.
Sales tax equity ignites none of the passions of guns or illegal immigration. It is of pressing interest, though, to Main Street businesses in cutthroat competition with Internet retailers.
And the act would give states new authority to collect sales taxes on mushrooming out-of-state sales — authority needed, for example, to realize one piece of Gov. Bob McDonnell’s signature state transportation funding package in Goodlatte’s home state of Virginia. The package includes hundreds of millions of dollars in state sales taxes that now go largely uncollected by online retailers.
Virginia is hardly the only state in dire need of that revenue. Commerce Department data show Internet sales have grown from 1.6 percent to more than 5 percent of retail sales in the U.S. in the last decade. In the third quarter of 2012 alone, e-commerce accounted for $57 billion in sales.
That translates into revenue states can ill afford to forfeit.
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