The Marketplace Fairness Act, passed 67-27 in the U.S. Senate last week, makes sense but faces demagoguery in the U.S. House.
The Internet is still such a new mechanism for making sales that states effectively treat it as a no-account cottage industry when it comes to taxation. Currently, a state collects no sales tax on online purchases unless the merchant maintains a physical presence in that state, as for example Amazon does in Washington. Nationwide in 2010, $118 billion in online sales were untaxed, compared to $58 billion that were. This is not a small-time issue.
In Washington, there was a total of $2.85 billion in online sales in 2010, nearly 71 percent of which was not taxed. One analysis shows the state would bring in an additional $845 million per two-year budget cycle if sales taxes were applied across-the-board to online sales.
This would be enough, for example, to provide all-day kindergarten to all the states children, avoid adding any more to already too-high college tuitions and make other meaningful steps to the complete funding of education required by the state constitution.
Washingtons counties on the Oregon border have long labored under the handicap of seeing sales leak away. The situation regarding Internet sales presents a similar problem nationwide, with brick-and-mortar stores struggling while they play by rules that favor out-of-state online merchants.
Those who make extensive online purchases will regret the end of the tax holiday they have enjoyed. Online merchants need to be provided with a straightforward system for collecting and paying sales taxes on a nationwide basis, something that may require additional refinements to the legislation passed by the Senate.
Some in the U.S. House, operating on the premise that taxation is inherently wrong, threaten to put obstacles in the way of his legislation. Wiser heads should prevail.
Republican U.S. Rep. Jaime Herrera Beutler, a smart moderate, is still considering her position on this matter. We encourage her to work with fellow GOP members of the House to make this change that will provide greater fairness for merchants in Washingtons Third Congressional District and throughout the nation.