Here's a New Year's resolution for the Florida Legislature: Finally stand up for tax fairness. Monday's U.S. Supreme Court's decision reaffirms that state lawmakers have been shirking their duty in failing to push more Internet companies to collect and remit sales taxes. State leaders should stop treating Internet commerce like a research-and-development project and start demanding it support the communities that allow it to thrive.
The Supreme Court declined to consider a challenge to a New York law aimed at getting at least some Internet sellers to collect and remit sales tax. While a victory for fairness, it falls short of the real fix needed to address the disparity between Internet retailers and their brick-and-mortar competitors. Congress should update federal interstate commerce laws so that all Internet sales are taxed based on the customer's location.
The U.S. Senate earlier this year approved just such a solution for companies with revenue of $1 million or more. But the U.S. House Republican leadership has kept the Marketplace Fairness Act of 2013 bottled up under the flawed claim that it would increase taxes — the same excuse obstructionists in Tallahassee have given. What they are really doing is protecting a politically active commercial sector at the expense of traditional retailers, their communities and fairness.
Local merchants who hire local employees are at a price disadvantage because they must collect sales tax while their online competitors do not. The status quo also increases tax inequity because traditional shoppers — some of whom may not even have Internet access — pay a disproportionate share of the tax burden to keep schools open, police paid and prisons functioning. And it belies the fact that Internet sellers rely on public infrastructure and sound communities for their marketplace. In Florida, the lost sales tax revenue from e-commerce is estimated at $454 million annually and rising.
In recent years, New York and several other fair-minded states — fed up with Congress' inaction — sought at least a partial remedy. They passed laws that defined Internet sellers that pay an in-state affiliate to refer customers to them as in-state businesses. Thus, they are required to collect and remit sales taxes. Both Amazon.com and Overstock.com challenged New York's law but lost at both the trial and appellate level. On the same day as the online shopping campaign that's become known as Cyber Monday, the U.S. Supreme Court refused to take up the case.
For one of the biggest Internet purveyors, Amazon.com, the inaction in Florida is now largely moot. The Internet giant is building two fulfilment centers in Hillsborough and Polk counties and will have to start collecting sales taxes from Florida residents when they open. But that's doesn't let Florida House Speaker Will Weatherford, Senate President Don Gaetz and their colleagues off the hook for continuing a policy that still favors carpetbaggers over Florida businesses and their customers. Sound tax policy is when any retailer selling to a Florida resident shares the same burden for collecting and remitting sales tax. Online or around the corner.