A bi-partisan group of U.S. senators introduced a bill on Nov. 9 that would allow states to enforce a sales tax on Internet commerce.
The Marketplace Fairness Act, announced by Sen. Lamar Alexander (R-Tenn.), Sen. Mike Enzi (R-Wyo.), and Sen. Dick Durbin (D-Ill.), will close sales tax loopholes for big Internet retailers and provide states with more revenue.
Internet commerce giants like Amazon and eBay have not been required to collect sales taxes from customers, which often drives prices down relative to their non-online competitors. Subsequently, big-box retailers like Best Buy, Wal-Mart, and Home Depot have united to support the legislation.
Continuing the trend of the last decade, electronic commerce sales figures soared in the third quarter of 2011. comScore, an Internet market research company, recently estimated online retail sales of $36.3 billion for that period, up 13 percent from 2010.
Senior economics and government and politics double major Dan Borman agrees with the senators, and said the bill is pragmatic enough to help with the economy.
“It’s fair to close tax loopholes,” Borman said. “We have a huge deficit, so any way we can capture more revenue would be an intelligent idea.”
The legislation gives states discretion on the decision to require companies to collect sales taxes. The voluntary nature of the bill is appealing to many Republicans, who are often resistant to raise taxes in any sense.
“The Republicans are all about the tenth amendment, which asserts the power of the states,” Borman said. “The states have the right to decide if they want to make the sales tax mandatory or voluntary.”
A provision geared towards helping small businesses appears in the legislation. Online retailers with annual sales less than $500,000 will be exempt from collecting state sales taxes.
Junior Arjun Dheer, a biodiversity and conversation biology major, said a slight hike in online retail taxes would likely affect his spending choices.
“Before every semester, I buy textbooks online because it’s cheaper that way, and occasionally I’ll buy things like posters, jerseys, and stuff I use for working out.” Dheer said. “It would deter me from doing it if the price with tax is no cheaper than it would be if I bought books in person.”