People known as "fit-lifters" and "showroomers" didn't exist in such large numbers until consumers began the practice of checking out merchandise at the local brick-and-mortar retailer for size and fit and then purchasing the products - online - tax-free.
We don't begrudge anybody seeking the best deal, but we do begrudge taxing entities allowing uneven playing fields for people who conduct business from a physical building locally and that are forced to collect sales taxes. For this reason, we will be watching and supporting federal legislation that aims to level that playing field with a sales tax policy for Internet sales that is fair and uniform.
On Monday, the Senate voted 69-27 in favor of the Marketplace Fairness Act, the so-called "Internet Tax." This is not a new tax. It is more accurately described as a tax everybody owes but only some people pay.
We were pleased to see a bill passed with bipartisan support, even though it did not elicit yes votes from Idaho's Republican Sens. Jim Risch and Mike Crapo.
Among other concerns, Risch balked because he thought the threshold for businesses that have to comply should be set at $3 million in sales instead of $1 million as prescribed in Senate Bill 743. Risch, ranking member on the Small Business Committee, also points out that there are more than 9,400 separate sales tax codes in the country. An amendment by Sen. Mike Enzi, R-Wyo., co-sponsor of the bill, opens up the possibility for more than 500 tribal sales taxes on online transactions as well. A Risch staffer said Amazon can keep track, but small Idaho online businesses could face costly and difficult accounting procedures.
Despite these excellent points, we wonder if worries regarding things that could happen should outweigh things that are happening. We know brick-and-mortar businesses and retailers are forced to collect sales taxes and thus are less competitive. We know the system of Internet taxation is largely being left to citizens to self-report. Since 1965, Idahoans who make purchases from out-of-state sellers are supposed to report those purchases and pay the appropriate taxes on income tax returns. Only 1.4 percent do so.
Should a "Level Playing Field Bill" pass both chambers and be signed into law by President Barack Obama, the change could be felt if and when the Idaho Legislature considers it and implements a state companion plan, perhaps in 2014. One result is that more Internet businesses would begin being permitted in Idaho (think eBay) and more revenue would be produced. But we Idahoans will be paying this Internet sales tax revenue just as we now pay it to our local retailers. How much revenue? Nobody knows for sure, but estimates range as high as more than $100 million.
What are the odds of "Level Playing Field" legislation passing the U.S. House, where tax is a dirty word? "It is important to note that this isn't a new tax, it is simply fixing the process for collecting taxes already due," said Nikki Watts, communications director for Rep. Mike Simpson, R-Idaho. "A business owner in Idaho should not be punished because an out-of-state competitor doesn't have to collect the tax."
The majority Republicans are said to be champions of small businesses and a large portion of that constituency operates brick-and-mortar businesses, such as the Ohio bar in the family of House Speaker John Boehner.
Local businesses need our support and we need their success. They employ people, pay payroll tax and contribute to our overall economic success. The ball is rolling on this reform. The prospect of a level playing field beckons. Certainly there will be trap doors and sinkholes along the way, but fairness needs to rule.