CONGRESS has taken an overdue but encouraging step toward harmonizing sales-tax enforcement between online and brick-and-mortar retail sales.
As part of the ongoing budget debate, a supermajority of 75 U.S. senators recently endorsed with an advisory vote the Marketplace Fairness Act. It was not a binding vote, but suggested a decadelong battle over online sales taxes is nearing an end.
The act, pending in the U.S. House and Senate, streamlines collection by requiring states to sign onto a multistate agreement.
Washington already has. And it stands to be a huge beneficiary. The state Department of Revenue estimates it could generate about $284 million in 2013-15, and $845 million in 2015-17.
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Those are not new taxes. Those are existing taxes not currently collected simply because a purchase was made online, instead of in person.
Washington’s homegrown e-commerce giant, Amazon.com, reiterated its support in a letter in February to Rep. John Conyers, D-Mich., ranking member of the House Judiciary committee, where the legislation is currently parked.
Judiciary member Rep. Suzan DelBene, D-Medina, has championed the issue, citing her tenure as state revenue director. Rep. Adam Smith, D-Bellevue, and Rep. Rick Larsen, D-Everett, also co-sponsored the legislation.
It should be a priority for the whole state delegation. The added tax revenue could seed the next generation of online entrepreneurs with investment in public and higher education.
It is also an issue of fairness. A 1992 U.S. Supreme Court decision, Quill v. North Dakota, ruled that an online retailer is not required to collect state sales taxes if it doesn’t have a physical location in the state. Resistance to online sales tax collection once centered on the fragility of e-commerce.
A generation later, the online economy is roaring — look no further than the Amazon-fueled building boom in Seattle’s South Lake Union. Today, the notion of giving a big price break to online retailers over brick-and-motor stores is as antiquated as a floppy disk.