UPDATE: Yesterday, the senate approved a bill known as the Marketplace Fairness Act, which authorizes states to levy a tax on purchases made online, with a vote of 69 to 27. This is a relatively rare example of bipartisan support for what many are calling a common-sense initiative designed to put brick-and-mortar shops on a level playing field with online shops like eBay and Amazon. Currently, online shops enjoy a tax-free advantage due to what is essentially an outdated loophole. And while it's been smooth sailing so far, the next step is the House, where the measure's future will be less certain. Still, Amazon.com is in support of the bill, leaving eBay as the only major retail force in opposition.
The tax, as David French (an executive at the National Retail Foundation) puts it, "is already owed. It is just not collected.” French told
that he's confident the bill will pass through the next round.
Chances are you don't pay that much attention to taxes when it comes to shopping. You're more concerned when it comes to things like, say, your income tax. But nevertheless, it's always a slight victory when you travel to a tax-free zone or purchase something online and the total is actually exactly what you expected it to be pre-checkout, right? Well, that simple pleasure might be over.
Today, the Senate is preparing to vote on a bill that, according to The Atlantic's Joran Weissmann, is the closest you are going to get to a sure thing in politics. The bill, which comes at a time when e-commerce is growing at a steadily rapid pace, will finally leverage a sales tax on purchases made from online retailers. In reality, you've always owed that tax to your state government, but the current law only requires businesses to charge a sales tax if they have actual brick-and-mortar outposts in the state of purchase. It historically has been up to the shopper to pay that tax themselves, and wouldn't you know, not many people actually did that.
Now, if you're a person who doesn't like taxes, or a person who doesn't like spending an extra few bucks (it can add up), you might be less-than-thrilled. If you're the kind of person who likes more money for your state, you might be pleased — a variety of sources estimate about $12 to $23 billion is due to states each year from online shopping purchases.
If you're worried about what this will do to your favorite online boutiques, don't be. Weissman's very thorough article points out that this bill, though it might sound scary, is nothing to get terribly upset about. The bill currently under review wouldn't apply to businesses with revenue under $1 million. Plus, it could actually help your local Main Street mom-and-pop shops by removing the slight advantage currently wielded by online shops whose prices don't include tax. Read on here to find out more, but ultimately, we're inclined to look on the bright side here.
Photo: OJO Images/Rex/Rex USA.