U.S. Senate Votes 75-24 for Level Playing Field for Main Street Retailers
Vote on Non-binding Resolution Shows Bipartisan Support to Require Internet Retailers to Collect Sales Taxes
Increasingly in recent years, there seem to be few tax issues on which liberals and conservatives can agree. So it was refreshing last Friday when there was strong bipartisan support for requiring large Internet merchants to collect state and local sales taxes – just as Main Street retailers do.
Perhaps the bipartisan support shouldn’t come as a surprise because the proposal isn’t primarily about taxes; it’s about fairness. People with a broad spectrum of views about taxes and spending agree that it’s unfair for our local businesses and bad for the Wisconsin economy to allow large Internet retailers like Amazon and Overstock to put their local competitors at a huge competitive disadvantage by not collecting sales taxes.
The 75-24 vote last Friday was on an amendment to add the Marketplace Fairness Act to the Senate’s 2014 budget resolution. That resolution isn’t going to be approved in the House, and in any case it is only intended to be a budget outline, not a piece of binding legislation. However, the lopsided vote for the Marketplace Fairness Act strongly suggests that when the act comes to the Senate floor it is very likely to have enough votes to overcome a filibuster.
A blog post yesterday by Michael Mazerov of the Center on Budget and Policy Priorities explains the legal history of the current exemption for interstate commerce, and the need for the proposed legislation. He notes that an estimated $11 billion per year in taxes on Internet Sales is uncollected each year.
For a local conservative’s take on the need for such legislation, see the March 22 column in the Journal Sentinel by Christian Schneider, who wrote:
“But being a conservative doesn’t always mean being ‘pro-business.’ More often, it means being ‘pro-free market.’ Businesses should be able to operate on a level playing field, and they shouldn’t be granted competitive advantages through tax loopholes – especially when those advantages vacuum money out of the pockets of Wisconsin retailers simply because they made the ‘mistake’ of building a store here. It’s this type of ‘crony capitalism’ that Republican budget leaders such as Rep. Paul Ryan (R-Wis.) have been denouncing for years.”
It’s unclear what the House will do on Marketplace Fairness Act, or whether the GOP leadership will even let it come up for a vote. Nevertheless, it’s heartening to see that this is an issue that many conservatives and liberals can agree on, and I think Main Street businesses will eventually convince both houses of Congress that the time is long past due to create a level playing field when it comes to responsibility for collecting sales taxes.
In the meantime, many states are proceeding on their own. By the end of the year, New Jersey will join California, Illinois, New York and a number of other states that have crafted sales tax laws that apply to retailers that have any physical connection to their state. Wisconsin should follow their lead.