States And Congress Out To Tax
Depending on where you shop you may or may not be taxed for your online purchases, but if the Sen. Richard Durbin (D-Ill.) introduced ”Main Street Fairness Act” makes its way to law-dom an e-tax could become the standard.
For years retailers were only required to tax consumers residing in states where they maintained storefronts. But that practice comes at a price, literally, to the states where they don’t exist. Apparently sales reporting is at the discretion of the consumer. If we all reported our online transactions via tax return we’d be responsible for the fees we dodged online, during tax season. Who knew?
Well, the states knew. And they’ve been grumbling over the revenue they are losing each year. Yesterday the Washington Post reported that from 2011 alone, Virginia could have collected $423 million, Maryland $376 million and D.C. $72 million.
Also rallying for the online tax are local businesses in competition with their web counterparts. If you’ve ever “shopped” for your items in-store and then made your purchase on the net, you’ve contributed to the much maligned “showrooming” effect.
“You’ve been doing all of the work and then the online competitor steals the sale,” David French, senior vice president of government relations at the National Retail Federation told the Post.
With so much money at stake, why has the process of regulating online taxes taken so long? Quite simply, because it’s complicated. Smaller businesses have long rejected the notion of keeping up with the varying rules and percentages.
“The burden falls disproportionately on a small business,” Steve DelBianco, executive director of e-commerce trade association NetChoice told the Post. “It has no accounting or IT staff to keep track of tax rules and holidays.”
But big business supports the bill as well, namely online retail giant Amazon. After a series of state battles over what constitutes as physical presence, they’ve become a proponent of regulating the process.
“We strongly support passage of the Marketplace Fairness Act because it’s time to resolve the sales tax issue,” said Amazon spokesman Scott Stanzel according to the Post.
The Post cited the National Conference of State Legislatures projection that a uniform e-tax could generate $23billion dollars in revenue every year. That is, if we all continue shopping. Researchers are quick to point out that states struggling in this economy need the boost, but what are these states comprised of? Residents, who are also struggling to make ends meet. It’d be interesting if the tax prompted a decrease in sales rather than the anticipated increase in revenue.