The Aug. 14 letter to the editor about Internet sales tax collection legislation is right about three things: The Marketplace Fairness Act is supported by Gov. Nikki Haley, it passed the U.S. Senate by a vote of 69-27, and Sen. Lindsey Graham voted in favor of it.
Unfortunately, the author got just about everything else wrong.
South Carolina’s political leaders support this legislation because it restores free and fair competition for all retailers and because it recognizes South Carolina’s right to determine and enforce our own tax laws.
Currently, local brick-and-mortar retailers are required to collect and remit the sales taxes on each purchase made.
Online retailers, however, have been exempt from this tax collection responsibility, leaving consumers with the false impression that the purchase was “tax free.”
In reality, according to existing laws in South Carolina, when the retailer doesn’t collect the tax for us, the burden falls on us to calculate the tax we owe on those online purchases and send it directly to the state.
Failure to report and remit the sales and use taxes owed on an online purchase leaves individuals open to audit and tax penalties.
The Marketplace Fairness Act wouldn’t create some new tax on online businesses, rather it would require online retailers to collect the tax is already owed by the consumer, just like brick-and-mortar retailers are required to do.
The letter argues that the Marketplace Fairness Act could lead to job loss. In fact, economists Arthur Laffer and Donna Arduin recently studied this issue and found that the Marketplace Fairness Act would position states to lower other more damaging taxes, thereby adding almost 20,000 jobs in South Carolina over the next decade.
They also project an estimated increase in our state GDP of more than $5 billion over that period. You can find the full study here: http://www.21stcenturyretail.org/files/dr-art-laffer-sudy.pdf
The problem of job loss is real, but it’s happening as state governments raise sales, income, property or other taxes to make up the lost revenue from uncollected sales taxes. It’s happening as government bias disrupts competition among retailers and puts another brick-and-mortar store at a severe price disadvantage, leaving it unable to compete.
The Marketplace Fairness Act protects small businesses whether they exist online or on Main Street. While the letter writer laments the cost of software to calculate and remit sales taxes, the bill requires states to make that software available free of charge. The bill also exempts small businesses with out-of-state sales under $1 million from collection requirements.
States would have to meet basic standards for simplifying their tax codes which will make it easier for all retailers — Internet and brick-and-mortar — to expand into new markets in other states.
Finally, it protects small local retailers, which already collect sales tax from the first dollar, by providing them with a level playing field on which to compete.
At the end of the day, if retailers want to benefit by doing business with consumers in South Carolina, they should all play by the same rules. If a retailer doesn’t like our rules, they have the choice not to sell here.
There is a reason that the Marketplace Fairness Act is supported by hundreds of businesses, organizations and local chambers of commerce.
It’s because it is sound policy and necessary to ensure free and fair competition for a healthy retail marketplace.
Let’s tell Congress to work together for the good of American business. It’s time to pass the Marketplace Fairness Act.