Newspaper article Roll Call

Marketplace Fairness: An Idea That's Time Has Come

Newspaper article Roll Call

Marketplace Fairness: An Idea That's Time Has Come

Article excerpt

The American free enterprise system, a marketplace economy featuring dynamic innovation, entrepreneurial risk-taking and robust competition, is what makes the United States such an inspiring country in which to start and grow a business. Over the past two decades, the Internet has burst onto the scene and developed into a vital, vibrant commercial platform in both the retail economy and the business-to-business space. It comes as no surprise that businesses of all sizes in various industries have taken to the Web in an effort to tap its economic potential. Our technology is cutting edge, but sadly, our sales tax system is stuck in the early 1990s thanks to a two decades-old Supreme Court decision (Quill v. North Dakota) - unable absent a federal legislative remedy to evolve to meet this vividly present and rapidly growing economic reality. Congressional action is needed now to ensure the free marketplace of the 21st century is one that features a level playing field for all who compete.

Right now, many merchants who sell their products online and do not have a physical presence; i.e., a distribution center, warehouse or retail store, in the state into which their product is sold aren't charging and, thanks to Quill, cannot be required to collect at the point of purchase state sales taxes on those sales. This stands in stark contrast to local wholesaler-distributors and retailers - businesses that have a brick-and-mortar presence on the Main Streets and in the commercial and industrial parks of our cities and towns and who provide jobs to our family members, friends and neighbors - who are required by law to do so. Under this antiquated tax loophole cemented in law by a pre-Internet-era decision the Supreme Court virtually invited Congress to overrule, remote sellers enjoy what amounts to a federally protected price advantage which can reach up to 10 percent over their brick-and- mortar competitors. Since after-tax margins in wholesale distribution typically run in the 2 percent to 2.5 percent range, it is not difficult to understand what this means for the "typical" wholesale distribution business or its employees. …

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