Fairness Act no tax increase; it is way to collect what’s owed
The U.S. Senate passed, 69-27, the Marketplace Fairness Act Monday. A big step forward. Both of Tennessee’s senators, Lamar Alexander and Bob Corker led the effort.
The bill would permit states to collect sales tax due from its residents on Internet and mail catalog sales of goods. It is not an increase in taxes, just a way of collecting sales tax already owed by residents who order from catalogs by mail or Internet.
However, there is a serious problem in the House of Representatives where the bill may not pass.
While Rep. John Duncan is a sponsor of the bill, there is a strong effort by opponents to classify it as an increase in taxes, which it is not.
Nationally, at least six governors, including Tennessee Gov. Bill Haslam, and two former governors are supporting the legislation.
States like Tennessee that lack a true state income tax seek to avoid adding it by collecting sales taxes due. In Tennessee that is 9.75 percent or nearly 10 percent of the cost of purchases.
Residents who do not pay this tax on items purchased increase the tax burden on other residents of Tennessee and in the end could boost other existing taxes.
A major loss of sales tax revenue comes from the use of junk mail catalogs, sent at such low postage rates they are helping bankrupt the postal system.
Many order without thinking about the investment local businesses have in our community:
1. They invest considerable money to offer a wide selection of quality goods and services at very competitive prices.
2. They pay property tax.
3. They pay business tax.
4. They pay insurance premiums.
5. They purchase local supplies and goods.
6. They provide jobs for local residents.
7. They are major supporters of worthwhile community projects. Blount County is known as a “giving community” and in addition to the many individual volunteers there are usually several businesses giving of their support to the worthwhile cause.
8. Without reimbursement, retailers collect the local and state sales tax, which brings back about $32 million annually to the local governments in Blount County. (Of the sales tax collected, nearly $10 million is from tourists and business representatives who spend some time in the county.)
These are costs of doing business which most catalog and Internet stores do not pay into the local economy.
Sen. Alexander summed it up well:
“This legislation is about two words — states’ rights — and today the U.S. Senate stood up for the 10th Amendment by saying it is the prerogative of states to set their own tax policies, without playing ‘Mother, May I?’ with the federal government.
“This bill allows states to require out-of-state sellers to do the same thing that in-state sellers already are required to do, and that many online sellers already do, and that is to collect sales tax when they make a sale.”
The vote in the House has not been set but it is obvious that your voice in behalf of the Marketplace Fairness Act is needed.