Time’s up for giving e-commerce a bye on collecting sales taxes, a practice that is increasingly unfair to consumers, taxpayers and business owners.
This week, the U.S. Supreme Court gave Colorado the final green light to try and force e-commerce giants like Amazon and others to tell consumers they owe sales taxes on their online purchases and need to pony up.
Years and years ago, state and federal officials agreed to bypass or just look the other way as e-commerce was born and struggling. That was then. Now, hundreds of billions of dollars in purchases each year are made on-line, and struggling state and local governments are losing out on taxes created by one of the single-most critical sources of government revenue. Currently, only businesses that have “brick and mortar” operations in a state are required to collect sales taxes for on-line purchases made and delivered to that state. It means something a consumer buys on Amazon is state sales-tax free.
While consumers might think that’s a good thing, it’s not. It pits businesses against each other unfairly, and most often small businesses are losers. Regardless of whether someone thinks sales taxes are a good or evil way to fund the government, that’s the system we have. And bypassing this system means budget troubles for things like roads, schools and more. Colorado alone estimates it loses about $170 million a year in lost sales-tax revenue.
Previously, the Supreme Court has ruled that states violated commerce provisions by collecting taxes from “stores” that have no brick-and-mortar presence in that state. Given the historical exploitation of the U.S. Constitution Commerce Clause, it’s hard to understand how a willing Congress hasn’t crafted an acceptable solution.
It’s not willing. Yet.
Colorado’s law may have passed this level of Constitutional muster, but as more states jump on board with at least a chance to get some of their missing sales-tax revenues, confusion is inevitable. Louisiana, Oklahoma and Vermont have now created similar laws all hinging on how the Colorado case turned out.
It’s time to solve this problem permanently, fairly and for every state, not just progressive ones like Colorado.
With annual Internet sales exploding, those days are long gone. Now, it’s wrong to give retailers like Amazon an unfair advantage over struggling businesses here in Aurora by allowing them a continued bye on collecting sales taxes.
Congress needs to pass some version of the bipartisan Marketplace Fairness Act, and state lawmakers need to iron out problems that keep Colorado from getting the money it needs and has coming.
While nobody wants to pay taxes, we wouldn’t have a state in our country if we didn’t, at least not one anyone would want to live in. The expectation of paying sales taxes is there, it’s time to create a fairer retail market here and across the country, and it’s time for governments to get access to revenue needed to make all of our lives better.