When ideology meets reality, something’s gotta give — and for anti-tax activists like Grover Norquist and his Americans for Tax Reform, that something is reality. No matter how badly the revenue is needed, where it would come from or what it would be used for, you don’t increase taxes (and they will decide what is and is not a tax increase, thank you).
But there are signs that the Republicans in Congress who have paid obeisance to these ideologues in recent years — on the deficit, tax code and other issues — are starting to listen to some people who live in the real world. Like their constituents who run brick-and-mortar businesses.
The issue is sales tax — or, more precisely, the inability of states to collect it on goods purchased out of state via the Internet. Main Street merchants have to collect and pay sales tax, but Internet retailers do not unless they have a “nexus” to that state — i.e. a physical presence or a relationship with another company that has one.
The brick-and-mortar businesses not only pay sales tax, they pay corporate tax, property tax, employ local people, support local organizations like Little League, etc.
And then they watch as their customers go online to save money by buying from Internet merchants who can charge lower prices — and often provide free shipping — because they don’t have to pay the overhead or collect the sales tax (although some do voluntarily). In some cases, just to add insult to injury, customers use the local store as a showroom, checking out a product or trying on an outfit and then going online to buy it.
Republican lawmakers may still be unmoved by pleas for help from the states, which are losing billions in tax revenue to Internet sales. But they are now listening to their constituents on Main Street and in the malls, who have become more vocal lately. The Marketplace Fairness Act, which would require online retailers to collect and remit sales tax to the state where the purchaser lives (and would provide free universal software to do so), appears to have enough bipartisan support to easily pass the Senate (the final vote is scheduled for May 6) and to get through the House as well.
It’s not actually a tax increase, just collecting taxes that are owed. But it is a tax bill, and some Republican lawmakers are ready to vote for it. That’s a refreshing change, and an encouraging sign.