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LETTER TO THE EDITOR: Online sales tax would level playing field for all businesses

Monday, May 12, 2014 | 4:04 p.m. CDT

Congress needs to pass the Marketplace Fairness Act so there is real and fair competition reflecting 21st-century commerce. America was built on promoting economic growth and business in a fashion that ensures fair competition for all.

Today, online-only retailers are not required to charge and collect sales tax, while local businesses must. However, the sales tax (in all but five states) is still owed.

The collection of these taxes is difficult to enforce unless online sellers have either a physical store or a warehouse within the state. When sales tax is not collected at the time of purchase, the burden falls on the consumer to report and pay.

Compliance is virtually non-existent. Based on a recent Ohio State University study, states are estimated to lose $23 billion a year from uncollected sales taxes on online goods.

The current sales tax code is unquestionably confusing for consumers and companies. For example, Amazon is now legally required to collect sales tax in 21 states, including the four most populous: California, New York, Florida and Texas.

The Marketplace Fairness Act is not an additive tax. It’s about ensuring all companies, regardless of the type of business, pay the same tax.

The tax disparity puts local businesses at a significant economic disadvantage and stifles the overall economy. According to a July 2013 study conducted by Arthur B. Laffer and Donna Arduin, federal legislation that would allow states to close the online sales tax loopholes would result in a more efficient tax system, a larger tax base, and lower tax rates for all taxpayers.

This will increase states’ prosperity and employment, increasing GDP by more than $563 billion and adding more than 1.5 million jobs in the next 10 years. It is time for Congress to grant states the ability to correct the unfair application of sales tax laws.

How does the Marketplace Fairness Act impact our community?

  • Columbia Mall is a premier shopping destination for Central Missouri.
  • Columbia Mall is an economic engine and catalyst for growth in Columbia and Boone County.
  • Columbia Mall contributes more than $15 million annually in property and retail sales taxes that pay for critical life-safety services, such as law enforcement, fire department, education and other services.
  • Columbia Mall also employs approximately 2,400 part- and full-time employees. The property has a stellar merchandise mix, including Central Missouri’s first H&M opening later this fall.
  • Columbia Mall is also part of a Transportation Development District, which is funding a major portion of the Stadium Blvd/I-70 road improvements that occurred last year and are continuing into summer of 2014.

Passage of the Marketplace Fairness Act allows Columbia Mall and other bricks-and-mortar retailers to compete fairly against online retailers. Bricks-and-mortar retailers are one of the economic engines that drive the local economy.

The act passed the Senate in early May 2013 and is currently under consideration in the House of Representatives.

Passing the act simply about enforcement of current tax law. Whether you shop at a store or online, taxation should be fair.

Rusty Strodtman is senior general manager of the Columbia Mall.


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Comments

Mike Martin May 12, 2014 | 5:21 p.m.

Since when has "taxation fairness" become a mantra for the retail development community?

In this state, retail developers enjoy special taxation districts (TDDs and TIF Districts) that shift their tax burden to you and me; and they do not pay anywhere near their fair share of property taxes on retail development land, which many local assessors (including ours) classify as low-tax "farmland" until the first tenant moves in.

Who pays the retail developer's share of property taxes, for schools and roads and libraries and such? You and I do. Just like the TDDs. Just like the TIFs.

What's more, online retailers consume a fraction of the public services bricks-and-mortar retailers consume, so they should pay far less sales tax.

I say: too bad, retail developers (like Stan Kroenke). If online retailers each your lunch via what you're now labeling as "unfair taxation," chalk it up to some long overdue poetic justice.

(Report Comment)
John Schultz May 12, 2014 | 9:55 p.m.

Sounds to me like this letter is completely skipping over the Quill Supreme Court decision that stated mail order vendors did not have to collect sales tax in the states that they did not have a physical preference. Treating Internet sales in the same manner preserves existing tax law.

(Report Comment)
Ellis Smith May 13, 2014 | 7:02 a.m.

Whether they operate through "bricks and mortar" or through cyberspace, firms offering goods and/or services are functionally the same. In a free, or relatively free, market, customers gravitate to those providers they believe will best satisfy their needs.

Imposing sales taxes on all Internet transactions won't drive successful Internet providers out of business; the survivers - and there will still be plenty of them - will become stronger in the long run.

In case it's escaped anyone's notice, there are Internet goods providers who also have brick and mortar operations in selected national and international cities. If you buy from them "brick and mortar," you must obviously pay applicable sales taxes; if you buy on line, you may be able to skip the sales tax, but you will have shipping charges (EXCEPT when the seller elects to skip those, either as an occasional sales promotion or on orders over a specified minimum amount).

It's called Capitalism. Ain't it grand?!

"In the master's chambers
They gather for the feast.
They stab it with their steely knives,
But they just can't kill the beast."
- "Hotel California" (Eagles). However, I doubt, from the rest of the song's lyrics, that it is Capitalism "they" are trying to kill. :)

(Report Comment)
John Schultz May 13, 2014 | 10:04 a.m.

Another point missed in the letter is that large retailers like Amazon are OK with paying sales tax, and imposing that requirement on all, since smaller operations are not able to handle the regulatory costs as well.

(Report Comment)
Ellis Smith May 13, 2014 | 11:43 a.m.

Definitely, John. This is one way the strong remain strong and become even stronger: they use such things to their advantage. Actions definitely have consequences - no doubt about that - but the consequences aren't always those initially sought. :)

Amazon et al. won't be paying those sales taxes, their customers will. Yes, Amazon will incur administrative expenses, but they can manage that (where, as you've suggested, their smaller and weaker competitors cannot). So the strong simply end up with an even larger share of the available market.

It's called Capitalism: the government formerly called the Union of Soviet SOCIALIST Republics tried, even through use of force and intimidation, to eliminate it and just look at what a mess they made in the process.

But...but...what about the present People's Republic of China? That's not Communism, that's state-operated Capitalism.

(Report Comment)

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