In a Seattle Times Op-Ed today, Peter Ollodart throws up his hands at the prospect of filing sales tax returns in 45 states, and consequently is lobbying against the Marketplace Fairness Act if Congress.
If he really had to do that, I’d agree with him. Of course, under the structure of the bill in Congress he won’t have to. All versions of the bill require that the states pay for software services that would be available free to the business collecting the tax. He would sign up with one of the providers and they would file all the returns for him.
Washington State has been a leader in trying to simplify collection of sales tax nationally for many years because we are uniquely dependent on sales tax revenues as a state, having no income or capital gains tax. The bill we passed almost a decade ago to enter into the multi-state agreement (more than half of the states collecting sales tax are members) was supported by a wide array of folks, including the Association of Washington Business and legislators of both parties because we recognized that the growth of Internet sales was putting pressure on both the state budget and on local businesses that find it hard to compete with a seller who has an almost 10% price advantage.
Good tax policy has low rates that are applied evenly so as not to affect business decisions. It makes no sense that tax policy alone makes some businesses do well at the expense of others, and we work hard to have taxes apply evenly as the world changes. We made a big change in how telecom taxes work this year – the last time the code in that area had been updated was in 1983. Back then the service was still a monopoly and nobody had cell phones.
The Markeplace Fairness Act is a reasonably well thought-through approach to simplify how sales taxes work a the national level and would even the playing field for our local businesses that have to compete with Internet sales on which there is no sales tax collected. The Seattle Times editorial board agrees: