American Independent Business Alliance

The Internet and a Level Retail Playing Field

The Internet and a Level Retail Playing Field

End the Tax Favoritism Hurting Storefront Retailers and Communities

Below is a sourced version of our letter published in the Wall Street Journal (paywall) on March 4, 2016

It’s great to see states refusing to let Congress’s inaction prevent desperately needed reform (“States Set Up Fight Over Web Sales Tax”). A marketplace that effectively subsidizes online and catalog retailers from 5% to 11%* over their brick-and-mortar counterparts is a rigged game, not the mythical “free market” espoused by politicians. Indeed, that subsidy exceeds the profit margin for many retail operations.

Graph by The Tax Foundation. Click to enlarge

It isn’t just those storefront businesses that are victims, but all community-serving businesses. Those storefronts help bring people into town for dining and entertainment. They use the services of local accountants, graphic designers and an array of other supporting services. As sales shift to online megaretailers, jobs diminish locally and nationally.

While it is important to exempt businesses doing only small amounts of online sales from the administration of sales-tax collection, that is a simple matter already written into existing bills before Congress. Congress’s inaction is inexcusable, considering that even the Supreme Court** recognizes its precedent is an anachronism from a time before e-commerce existed.

Jeff Milchen,
Bozeman, Montana

The writer co-directs the American Independent Business Alliance

* Combining state and local tax rates — a few localities are lower and 5 states are without a statewide sales tax (NH, OR, AK, MT, DE). See chart below.

** In Direct Marketing Association v. Colorado (decided in 2015) Justice Kennedy wrote in his concurring opinion, “It is unwise to delay any longer a reconsideration of the court’s holding in Quill. A case questionable even when decided, Quill now harms states to a degree far greater than could have been anticipated earlier.” A thorough report on that ruling is here.

Related Resources 

To Help Main Street, Close the Internet Sales Tax Loophole (2011 Business Week commentary by AMIBA co-founder Jeff Milchen

All About Amazon resource library

Best Sources on State Sales Tax and Reform of Internet Exemption

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