Tax fairness and the Internet

April 25, 2013 

The days of sales tax-free buying on the Internet may be numbered -- and while many people do not like the proposal, it should be approved as a matter of fairness.

The U.S. Senate is expected to vote today on a bill that would let states require online-only retailers to collect sales taxes, just like most states require of brick-and-mortar stores and their Internet sites. Illinois Sen. Dick Durbin, a Democrat, is leading the effort. Illinois' other senator, Republican Mark Kirk, opposes the legislation.

Kirk and other opponents complain that this would be new taxation. "At a time when unemployment in Illinois stands at a staggering 9.5 percent, now is hardly the time to implement a new layer of taxes and regulations on Illinois job creators," Kirk said in a written statement.

But this would not be a new tax. People are supposed to pay taxes on Internet sales now; most people do not because states have no good way of collecting the money or enforcing that requirement. This bill simply closes a loophole.

Kirk said the legislation does not do enough to protect small- and medium-size businesses, but online businesses that do less than $1 million in sales a year are exempt.

As online shopping becomes a bigger piece of the market share each year, so does the need to fix this tax inequity. Gov. Pat Quinn estimates that Illinois lost out on $200 million in revenue last year because of the loophole.

Kirk worries about the potential impact the bill could have on jobs; we already know that the status quo is jeopardizing jobs. Brick-and-mortar stores are increasingly finding themselves treated as showcases rather than stores -- people come in, test out items then buy from a tax-free Internet site.

It's time for Congress to level the playing field for all retailers.

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