The U.S. Senate is expected to vote next month on a bill that could require online retailers to collect sales taxes from customers in every state that imposes them. The measure has been bashed by opponents as a tax increase that would cripple small Web businesses. It’s not, and it won’t.
Instead, the Marketplace Fairness Act would eliminate an outdated restriction that favors those who can shop online over those who can’t or won’t. That’s reason enough for it to become law.
For much of the last two decades, Internet retailers collected sales taxes only from customers in the states where they were headquartered or had employees. They based that approach on a 1992 Supreme Court decision that barred states from requiring retailers with no physical presence there to collect sales taxes for them. Such a requirement, the court reasoned in Quill Corp. vs. North Dakota, would unacceptably impede interstate commerce.
The point that’s often missed here is that the tax is owed by buyers, not sellers. And even with the Quill ruling, most states still required residents to pay taxes on out-of-state purchases as part of their annual tax returns. But the ruling made it difficult for states to enforce that requirement, and not surprisingly, few people complied. Now, anyone with an Internet connection and a credit card can buy goods “out of state” without paying the tax they owe.
Sales taxes are an important part of the revenue mix for governments because they don’t penalize labor, savings or investment the way taxes on wages, dividends and capital gains do. The more sales that evade the tax, the more pressure lawmakers feel to raise the rate. That just makes things worse for consumers who buy locally and for the retailers who serve them.
Some online retailers evidently want the public to believe that the Internet is a giant duty-free mall because it gives them a competitive edge over local stores. That’s just not true, but the lack of compliance results in a tilted playing field that hurts local retailers and the people who rely on them.

That's it! We must ban the French!

Readers Write: Gun policy and legislative sit-in, health care costs, Prince and the opioid crisis, panhandling
A Minnesota House vigil puts focus on gun issue

Minnesota Legislature gets serious about sexual harassment

StarTribune.com welcomes and encourages readers to comment and engage in substantive, mutually respectful exchanges over news topics. Commenters must follow our Terms of Use.
Comments will be reviewed before being published.