Make us your home page
Instagram

Reagan economic adviser advocates for collecting more sales tax

Arthur Laffer has been hailed as a key player in the tax-cutting movement of the 1980s.

A noted economic adviser to former President Ronald Reagan, he theorized that lower tax rates could result in higher revenues. His "Laffer curve'' showed that boosting tax rates beyond a certain point is counterproductive for raising more tax revenue.

So it might come as a surprise to some conservatives that he's on a mission to collect more sales taxes.

On Thursday, Laffer announced results of his new study that backs federal legislation allowing states to collect sales tax from remote online retailers. If used correctly by states, he said, the Marketplace Fairness Act could be a boon to the U.S. economy, resulting in 1.5 million new jobs and an additional $563 billion in gross domestic product over the next decade. In Florida, he estimates it would create about 107,000 jobs and $34.9 billion in GDP.

"This is not a conservative or a liberal paper,'' Laffer said. "This is just economic efficiency. If you use a better tax structure, you're going to be able to get better growth, output, employment, production and tax revenues. The better tax structure would include all sales, not just those sales in brick-and-mortar operations in a state.''

The study becomes particularly relevant in Florida, where online retail giant Amazon has proposed building one or more distribution centers — and adding 3,000 jobs — as part of a deal that would require Amazon to collect sales tax on Florida purchases. Currently, only retailers with a brick-and-mortar presence in the state have to charge sales tax — a contentious rule some Florida lawmakers have tried unsuccessfully to change.

Co-authored by Laffer and Donna Arduin, the study estimates states lost more than $23 billion last year by not collecting sales tax on purchases made through online-only retailers. In Florida, that amount has been estimated at $450 million a year.

Those losses have resulted in a smaller sales tax base that stifles job creation and economic growth, especially in states like Florida with no income tax, Laffer said.

And instead of cutting spending to adjust for reduced revenues, many states have raised tax rates, compounding the problem.

Laffer advocates that the 45 states with a sales tax could use the additional revenue to reduce other more burdensome taxes, like income or property tax. He characterized sales tax as the "optimal,'' most neutral tax with the least loopholes and incentives for dodging.

Opponents of the Marketplace Fairness Act, most of them fiscal conservatives, have argued that charging sales tax on Internet purchases amounts to a new tax that leads to more tax revenue and bigger government.

Supporters counter that the 1992 U.S. Supreme Court ruling allowing e-retailers to avoid sales tax across state lines came before e-commerce came into play.

"The situation has now changed dramatically and has reversed to the point where the small main street retailers are operating at a statuarily endorsed competitive disadvantage,'' said Colin Hanna of the Alliance for Main Street Fairness, a study proponent. "Putting everyone on the same plane so the same rules apply is a conservative principle of taxation.''

Laffer's study was funded by the Marketplace Fairness Coalition, a business group backing the e-commerce legislation.

Susan Thurston can be reached at sthurston@tampabay.com and (813) 225-3110.

Reagan economic adviser advocates for collecting more sales tax 07/18/13 [Last modified: Thursday, July 18, 2013 8:45pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. Last steel beam marks construction milestone for Tom and Mary James' museum

    Growth

    ST. PETERSBURG — Tom and Mary James on Wednesday signed their names to the last steel beam framing the 105-ton stone mesa that will be built at the entrance of the museum that bears their name: the James Museum of Western and Wildlife Art.

    The topping-out ceremony of the James Museum of Western & Wildlife Art was held Wednesday morning in downtown St. Petersburg. Mary James (from left), husband Tom and Mayor Rick Kriseman signed the final beam before it was put into place. When finished, the $55 million museum at 100 Central Ave. will hold up to 500 pieces of the couple's 3,000-piece art collection. [Courtesy of James Museum of Western & Wildlife Art]
  2. Heights Public Market to host two Tampa Bay food trucks

    Business

    TAMPA — The Heights Public Market announced the first two food trucks for its "rotating stall," which will feature new restaurants every four months. Surf and Turf and Empamamas will be rolled out first.

    Heights Public Market is opening this summer inside the Tampa Armature Works building.
[SKIP O'ROURKE   |   Times file photo]

  3. Author Randy Wayne White could open St. Pete's biggest restaurant on the pier

    Food & Dining

    ST. PETERSBURG — The story begins with Yucatan shrimp.

    St. Petersburg Deputy Mayor Kanika Tomalin, pilot Mark Futch, Boca Grande, St. Petersburg Mayor Rick Kriseman, and author and businessman Randy Wayne White,  Sanibel, exit a Maule Super Rocket seaplane after taking a fight around Tampa Bay off the St. Petersburg waterfront, 6/28/17.  White and his business partners are in negotiations with the City of St. Petersburg to build a fourth Doc Ford's Rum Bar & Grille on the approach to the St. Petersburg Pier with a second event space on the pier according to White. The group met near Spa Beach after a ground breaking ceremony for the new pier. "We want to have our business open by the time the pier opens," said White. Other Dr. Ford restaurants are located on Sanibel, Captiva and Ft. Myers Beach. SCOTT KEELER   |   Times
  4. Guilty plea for WellCare Health Plans former counsel Thaddeus Bereday

    Business

    Former WellCare Health Plans general counsel Thaddeus M.S. Bereday pleaded guilty to one count of making a false statement to the Florida Medicaid program, and faces a maximum penalty of five years in federal prison. A sentencing date has not yet been set, acting U.S. Attorney W. Stephen Muldrow of the Middle District …

    WellCare Health Plans former general counsel Thaddeus M.S. Bereday, pleaded guilty to one count of making a false statement to the Florida Medicaid program, and faces a maximum penalty of five years in federal prison. A sentencing date has not yet been set, acting U.S. Attorney W. Stephen Muldrow of the Middle District of Florida stated Wednesday. [LinkedIn handout]
  5. DOT shows alternatives to former Tampa Bay Express toll lanes

    Transportation

    TAMPA — State transportation officials are evaluating at least a half-dozen alternatives to the controversial Tampa Bay interstate plan that they will workshop with the community over the next 18 months.

    Florida Department of Transportation consultant Brad Flom explains potential alternatives to adding toll lanes to Interstate 275 during a meeting Wednesday at DOT's Tampa office. Flom presented seven diagrams, all of which swapped toll lanes for transit, such as light rail or express bus, in the I-275 corridor from downtown Tampa to Bearss Ave. [CAITLIN JOHNSTON | Times]