Womack’s Plan On Internet Tax A Fairness Issue

If government establishes a sales tax and a business doesn’t collect and remit it to the state, does that mean the tax doesn’t exist?

Sounds a lot like the whole “does a tree make a sound if it falls in the middle of a forest” query, doesn’t it? Since we’ll never settle that debate, we’ll stick with the tax question.

Logically speaking, the tax exists as soon as the government says it exists. If you don’t believe that, just ask Mohammed Khaldi. Last Friday, the state of Arkansas closed down four Fayetteville businesses he operates because he was more than three months behind sending in sales tax receipts collected on customer purchases.

That sounds like a pretty real tax.

So it’s a little perplexing 3rd District Rep. SteveWomack, R-Rogers, is getting some pushback from within his own party over his Marketplace Equity Act, which isn’t an act yet.

It’s only a bill, sitting there on Capitol Hill.

But this week, Womack and others have giventhe bill a final push in an effort to get it passed before this Congress recesses.

Folks such as the antitax bully Grover Norquist say Womack’s bill is “unacceptable.” Others criticize his effort as creating a new tax, but the reality is 46 states have sales taxes on the books that online retailers should be collecting and remitting for sales in those states. In Arkansas, federal law and court decisions have limited online collection of taxes. According to Arkansas law, the purchasing customer is responsible for remitting sales tax on Internet purchases. How often have you done that? But Womack’s point remains.

“It’s not a new tax,” Womack said, setting up the punch line. “It’s a due tax.”

What Womack’s bill would really do is level the playing field, at least as far as government taxation goes, between bricks-and-mortar retailers and retailers who operate solely online. It’s not fair, he argues, when shops that make investments in communities and hire local workers are required to collect a tax on their sales, but they can be undercut online partially because those purchases are tax-free.

That makes sense.

Some have tried to paint Womack’s efforts as a move to benefit Walmart. The company, after all, is headquartered within Womack’s House district.

But regardless of how the bill turns out, Walmart is going to be just fine. It’s the smaller local stores that face an unfair competition with online sellers.

Customers in some cases shop locally because they get good customer service and answers to their many questions about a product, then they walk outside and order the same product for less online.

At least a part of that is because the government allows one retailer to sell tax-free and the other one doesn’t get that benefi t.

Hey, we’re not arguing for the kind of local store protectionism some communities have tried to ward off big-box stores. The stores with local facilities still face marketplace challenges of how to compete against sellers that don’t have physical stores and the overhead that comes with them.

Local stores will have to compete by off ering outstanding selection and great customer service.

Such issues are not the government’s business.

But fair tax collecting is. It’s strange some in the same party that argues for closing loopholes in the federal tax code - in effect raising new revenue - can’t see the Marketplace Equity Act as exactly the same approach: simply allowing states to collect the taxes that are already supposed to be paid on Internet transactions.

Has Congress lost its ability to see basic fairness?