Is the party over for online shopping? Outrage swells over Internet sales tax
'Marketplace Fairness Act' slaps sales tax on purchases made online in order to comply with state taxes
For those of us who enjoy making purchases online, via such popular sites such as eBay, Amazon, even Catholic Online - these days of tax-free shopping may be rapidly drawing to a close. "The Marketplace Fairness Act," supported by the Obama Administration, seeks to make a level playing field for all purchases, saying the taxes are then put to making state infrastructures work.
While the Fair Marketplace Act may sale through the Senate, others predict that the bill will have a much harder time in the House - because - "It would feel like a tax increase to consumers"
The Marketplace Fairness Act easily cleared a Senate procedural hurdle by a 74-20 margin. And final passage is expected later this week.
To bolster their support for the measure, the Obama administration adds that "goods or services sold from out-of-state vendors . are prevented under current law from requiring the collection of such duly-enacted taxes . while local small business retailers follow the law and collect sales taxes from customers who make purchases in their stores, many big business online and catalog retailers do not collect the same taxes.
"Because these out-of-state companies are able to play by a different set of rules, this disparity undermines the ability of cities and States to invest in K-12 education, police and fire protection, access to affordable health care, and funding for roads and bridges. This bill would eliminate the unfair advantage currently enjoyed by big out-of-state online companies over local neighborhood-based small businesses," the administration says.
Columnist Kent Hoover disagrees. "State and local governments, meanwhile, are hungry for the estimated $22 billion in additional tax revenue they would get if online sales were taxed."
Hoover says that while the act may sale through the Senate, Hoover predicts that the bill will have a much harder time in the House - because - "It would feel like a tax increase to consumers"
"Technically, the bill doesn't create a new tax; it just gives states a way to collect money that's already owed. Sales taxes already are supposed to be paid on Internet purchases, unless the buyer lives in a state that doesn't have a sales tax,' Hoover notes.
More importantly, "since states currently can't force an out-of-state business to collect taxes for them, it's up to the buyer to send a check to his or her state for the tax owed on their purchase. Few consumers do this, however, and states have no practical way to enforce this obligation."
Hoover expects very high public dissatisfaction with the Marketplace Fairness Act. "So, with a few exceptions, the Internet feels like tax-free shopping to consumers. They're not going to be happy when sales taxes are added to their orders when they check out. It would feel like a tax increase."
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