Supporters of online sales tax say it's good for consumers
Customers that purchase products online are already supposed to pay taxes, supporters say
IDG News Service - Legislation that would allow states to collect sales tax from online sellers is good for consumers, because it would help them pay the taxes they already owe, supporters said Tuesday.
Many people who buy products online don't know that they're supposed to pay sales tax to their states, some supporters of the Marketplace Equity Act said during a hearing on the bill before the U.S. House of Representatives Judiciary Committee. This nonpayment of sales taxes owed in 46 states exposes consumers to potential action by state tax collectors, said U.S. Rep. Steve Womack (R-Ark.), a sponsor of the bill.
Online retailers that have no physical presence in a state don't have to collect sales tax from residents. That situation is "bad for retailers, bad for cities, counties and states who levy sales taxes and bad for consumers, who are unwittingly exposed to potentially incriminating audit issues," Womack told the committee.
The bill, which would require online retailers to collect sales taxes from customers, would not impose a new tax, supporters argued. About 1% of online shoppers now send sales tax for online purchases to their state governments.
"We're trying to help a nation of people right now who are breaking the law by not paying their taxes," said Gov. Bill Haslam of Tennessee, a Republican.
Some lawmakers disagreed with supporters' assertion that the legislation creates no new taxes.
Whether the bill would create a new tax is "in the eye of the beholder," said Joseph Henchman, vice president of legal and state projects at the Tax Foundation, a tax research group. "It's an existing tax that's not paid by the vast majority of people who should be paying it," he said. "I think a lot of people will see it as a new tax."
Rep. Hank Johnson (D-Ga.) said he supports legislation to equalize the taxes between brick-and-mortar and online retailers, but he expressed surprise that many anti-tax Republicans support the Marketplace Equity Act. The bill would give states new authority to impose taxes, he said.
"It's a new tax for those who purchase their goods on the Internet," he said.
Haslam and other supporters of the bill argued that the current system, set up by a 1992 Supreme Court ruling, is unfair to Main Street retailers that have to collect sales taxes and to state and local governments that are missing out on billions of dollars in revenue each year. Tennessee loses about $400 million a year because it cannot collect sales tax from out-of-state websites, Haslam said.
The current system hurts brick-and-mortar businesses, supporters said. Many local retailers see people come into their stores to check out a product, only to buy it online, sometimes using their smartphones to order a product online while still in the store, Womack said.
- It's Not Them, It's You: How Customer Experience Impacts Your Identity and Access Management Practices Customers want more online access, but they also want to do less to get there: more mobility with less hassle. More security, but...
- 5 Reasons It's Time For Secure Single Sign-On While cloud-based applications provide many business benefits including lowering capital expenditures, they can also drive up operational expenses by requiring more administration and...
- Identity is the Center of Omnichannel This paper covers the benefits of adding an identity layer to bridge the gaps of simplified access, multiple entry points and authentication -...
- How to Extend Identity Security to Your APIs This paper discusses what these standards and specifications are, how they can be composed with existing standards like SAML, and details about how...
- What Does it Take to Deliver a Superior Customer Experience? The Two Top-Rated Online Retailers, B&H Photo and Crutchfield Electronics, Share Their Secrets Discuss practical CX tools and service methods such as contact center agents and the use of realtime speech analytics to help contact center...
- Cloud BI in Action: Recorded Webinar of Customer, Kony, Inc. See how Kony, Inc., a leading enterprise mobility company, is using TIBCO Jaspersoft for Amazon Web Services and Redshift to achieve embedded analytics... All E-business White Papers | Webcasts