It’s not an Internet tax, dammit, no matter how many times lazy headline writers call it that.
People who buy retail items on the Internet already owe sales tax. But unless the Internet site you buy from collects the tax, it’s not going to be paid. This leaves the brick-and-mortar stores down the street at a competitive disadvantage—almost a 10 percent margin in Tennessee. Those brick-and-mortar stores pay property tax for schools and collect sales tax for everything else.
But unless the Internet seller has a location in your state, your state can’t make them collect the sales tax that is owed. A bill has passed the U.S. Senate that would allow states, if they wish, to require any online retailer shipping goods to the state to collect the sales tax.
You should have heard all this before when we had the fight over making Amazon collect sales tax for Tennessee purchases when the company opened distribution centers here.
The issue is fairness to brick-and-mortar retailers in our state, and other states as well.
I agree with my conservative brethren who say that if people aren’t now being required to pay a tax and then they have to pay it, it amounts to a tax increase for them. It also could be a windfall for state and local governments.
These are some of the arguments among U.S. House members who are threatening to defeat the legislation. Some of them are just posturing and purposely claiming they won’t vote for a tax increase. Some of them may be so stupid they think it is a tax on the Internet.
There is a solution, however, and the Tennessee Legislature and its leaders will likely be quick to pursue it. If “fairness” with everybody collecting the sales tax produces a windfall, then cut taxes. That idea is supported by Lt. Gov. Ron Ramsey and House Speaker Beth Harwell.
Since the Republicans have taken over the state House and Senate and the governor’s office, they have cut taxes every year. The gift tax, the inheritance tax, the Hall income tax, and the sales tax on food. They will likely attempt to cut taxes again next year if the budget allows. I think it is a sure bet that if new sales tax revenue provides a surplus, you can count on the current Legislature to cut taxes substantially.
So, Congressmen, passing the “Marketplace Fairness Act” is not a tax increase in Tennessee—it should mean a tax cut for everybody.
This hasn’t prevented people who have other agendas from obfuscating the issue. There are those who will take any opportunity to scream tax increase and threaten any officeholder who considers any new measure. There are also officeholders who will jump out front on the issue and use it to score political points.
Revenues to local governments should also increase if the sales tax is collected. Since Knoxville/Knox County is the retail center for the region, its revenues should go up substantially. This will allow local government to possibly cut rather than raise property taxes, or even repeal the wheel tax.
Thus far the case isn’t being made to the public that the issue is fairness and that it should result in lowering taxes. Talk radio, cable news shows, and special-interest groups have certainly tried to confuse the issue. I don’t blame the public for being suspicious of politicians. It is understandable to think that given a revenue windfall, politicians will just find something else to spend it on.
There will likely be some who will attempt it. But we’ve seen in recent years that legislators, nationally, and at that the state level, have come to love tax cuts and the public appreciation when they do.
Tennessee’s Legislature has a track record of cutting the budget and cutting taxes.
Tennessee’s sales tax is too high.
Local governments need to protect local business taxpayers from unfair competition.
Tennessee’s congressional delegation should support collecting the sales tax that is owed.
And, dammit, stop calling it an Internet tax.