A 2/27/12 post - "Main Street Stores Should Not Become Online Retailers’ Showrooms" observes that people often visit flooring showrooms so they can touch and see the materials, but then order the items online from other vendors to avoid sales tax. Chris Davis, the poster, observes: "Federal action is necessary to make sales fair no matter where they occur. We want Internet retailers to collect sales tax at the point of sale just like community-based stores are obligated to do. That’s why the World Floor Covering Association has joined with other organizations and companies in supporting the Marketplace Fairness Act and the Marketplace Equity Act. The bills are in no-way “anti-Internet”, but instead seek to address fundamental unfairness in the marketplace."
I agree. At a November 30, 2011 House Judiciary hearing on the topic, a small business owner noted that sometimes customers asked for a 6% discount to account for the sale tax. The owner reminded the customers that he doesn't keep the sales tax, but that it goes to the government. Customers did not care. I assume that many of these customers are also people who like to send their children to good public schools, get police and fire protection and get potholes filled in their streets. Where do they think the revenue comes from? And governments have been somewhat remiss in all of this too if they have raised sales tax rates (or in California, local sales tax rates get raised only by voters) rather than pushing for Congress to pass a remote sales tax bill (there are currently three versions of legislation on this topic). (Most states also need to broaden their sales tax base to include digital goods and services purchased by consumers, but that is another topic.)
I think Congress may indeed pass legislation - perhaps in the lame duck session, as a cheap way for the feds to help states (retailers say there is $24 billion in uncollected sales tax annually).
For more, including the links to the three versions of remote sales tax collection bills before Congress, click here.
What do you think?