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Marketplace needs sales tax fairness

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John Doyle John Doyle

John Doyle represented Jefferson County in the House of Delegates for 22 years. He was on the Finance Committee for 19 years and was vice chair for 10 years. He represented West Virginia on the Streamlined Sales Tax Project for 10 years and was president of the Streamlined Sales Tax Governing Board (the 24 states referred to in this column) in 2008 and 2009.

In both a news story and an editorial, The State Journal recently helped perpetuate some misunderstanding about sales tax collection.

A sales tax is owed by the customer, not the seller. It is owed whenever a taxable item (product or service) is bought, whether online, through the mail, over the phone or at the store. It is the item that counts, not the method of purchase.

Presently the seller is responsible for collecting the tax when the item is bought at the store. The seller is also responsible for collecting the tax when an item is purchased online, by phone or by mail from a seller with a physical location in the state where the purchaser receives the item.

But if you buy an item from a "remote" (out-of-state) seller online, by mail or phone, that seller does not have to collect the tax. You, honest citizen, are in the untenable position of figuring out how to pay the tax you owe or being a tax cheat. This isn't fair to you or to the merchants who must collect. If some of them must collect, then it seems reasonable and fair that they all should have to.

The issue is not one of requiring Internet sellers to collect but rather requiring remote sellers to collect. And just as today's software makes it easy to deliver an item to any location, software makes it easy to determine the tax at that location, even where there are local sales taxes.

But the Marketplace Fairness Act, which would correct this unfairness, will make collection even easier. Sellers would have to deal with only a single entity in a state and the necessary software must be furnished to remote sellers free! And any business doing less than a million dollars in remote sales (non-remote sales aren't counted) is exempt from having to collect.

This bill recently passed the U.S. Senate by a decisive 69-27 vote. Twenty Republicans voted for it. Supporters ranged from the most liberal senator (independent Bernie Sanders of Vermont, a proclaimed socialist) to all six senators from Mississippi, Alabama and Georgia. Our two senators, Jay Rockefeller and Joe Manchin, joined the majority in this positive demonstration of bipartisanship.

Much of the media styles this fight as small businesses versus retail giants like Walmart and Amazon. That's a whopper of a misrepresentation. More small businesses favor Marketplace Fairness than oppose it. Supporters include many family-owned businesses who must now collect the tax while their competitors are let off the hook. And while Walmart and Amazon support it, eBay and Overstock (also giants) oppose it.

The State Journal says this issue is about revenue. Nonsense. It's about fairness. The amount of revenue needed is determined by the level of government services the people, acting through the Legislature, say they want the state to provide. How to best get that revenue is a separate question.

The government should not use tax policy to pick winners and losers in the economy. But that's what's now going on because we don't require remote sellers to collect.

To my mind the test of a tax structure is threefold. Does it get the money the law presently requires and does it do so as simply and fairly as possible?

 Marketplace Fairness won't increase taxes. Steve Womack, a Republican congressman from Arkansas and the lead sponsor of Marketplace Fairness in the House of Representatives, says, "This tax is not new. It is due."

"Jettison the sales tax altogether," thunders the State Journal. That tax brings in over $1 billion to our state's $4 billion general fund. What services would be cut to make up for this enormous hole punched into the budget?

And it's always seemed to me that conservatives think sales taxes are preferable to income taxes and property taxes. Is The State Journal becoming liberal?