The urgent issue of online sales taxes is a subject that just about everyone talks about, but one that never seems to move any closer to resolution.
Talks at state and federal levels have been unproductive. State officials, including Gov. Bill Haslam, and business leaders around the nation have urged Congress to address the issue. A Senate committee, for example, recently heard testimony about getting online retailers to collect sales taxes, but that prompted no additional action before Congress adjourned for its summer recess. Moreover, there's no indication that movement on the subject is nigh. Such delay is the antithesis of good government.
Postponing meaningful discussion of the issue or simply ignoring it won't make it go away. As more and more people shop online and states continue to lose sales tax revenue as a result, the need for resolution of the thorny issue grows greater. Shoppers, for the most part, seem resigned to payment of such taxes. Online retailers are the problem. Many say that requiring sales tax collection for the various states is a costly, complicated burden that they should not have to bear. That's nonsense.
Some online retailers -- including Amazon -- that once vehemently opposed any requirement to collect states sales tax, now support doing so. They say it is fair to both retailer and consumer and can be done easily, since most states now have standard categories for taxed and untaxed items and because computer programs apply the appropriate amount of tax to each purchase, regardless of where the items will be shipped. Indeed, national chains that operate in many states and also offer their wares online do so.
The issue is growing more and more urgent. Online sales totaled about $50 billion a quarter earlier this year, the first time they have reached that level. States, many in economic difficulty, certainly could use the sales taxes that online sales should generate. Brick-and-mortar stores would benefit from uniformity on the issue, too. Now, many consumers browse in local stores, then order online to save the sales tax.
That's unfair to local merchants required to collect sales taxes. Though some online retailers choose to collect sales tax, many legally do not. A U.S. Supreme Court ruling handed down long before online retailing became an economic engine says there is no requirement that companies collect taxes for states in which they do not physically operate. That rule is archaic and should be updated -- legislatively and/or judicially -- to reflect modern business models.
The 50 states can't resolve the problem on their own. It's up to Congress to take the lead. If it does not, states surely will raise other levies and fees to make up for growing shortfalls in sales tax revenues, and to provide equity for brick-and-mortar retailers that provide jobs and tax revenue to local communities. National rules that require collection of state taxes on all online purchases is a far more equitable and preferable solution.