Let’s start with a given: online retail sales have always been subject to state and local taxes. The percentage of people who pay those taxes voluntarily, however, is in the single digits. The low single digits.
Taxes are never popular. But Marketplace Fairness isn’t about higher or lower taxes, it’s about fair collection of the taxes that people owe. Passing the Marketplace Fairness Act would restore parity to the retail market, giving every retailer the same opportunities to compete. It would remove the government tax collection bias that weighs unfairly on the brick-and-mortar.
I believe in free markets. The principles of fair and honest competition are what drive retailers big and small to offer the best products and service. Thriving retail markets also bring tourists and generate the economic activity that keeps many small towns alive. Remember that the taxes these towns collect from retail sales aren’t going to huge federal spending programs. Local governments collect taxes so they can build schools and pay local teachers to educate the kids in their communities. These taxes go to essential emergency response services, and business and community development programs that make it easier for kids to become entrepreneurs, to become local job creators, and to fuel the local economic engines of communities across the U.S. Local taxes drive growth at the local level, and fuel economic development from the ground up.
When Oak Ridge needed a new high school, the city put a referendum on the ballot to pay for it. Voters approved that referendum by a wide margin. Nobody likes paying taxes but when the choice was between saving a few dollars on a blu-ray player or having enough classrooms to keep our kids on the path to success, the voters stepped up. And as much as I love Oak Ridge, I know popular support for this kind of essential local service goes beyond our community.
If the harshest critics of mom-and-pop retail are right, and in-person retail is dead, little towns and villages around America are dead, too. Our state collects no income tax, meaning that we rely entirely on sales and property tax revenue. Vanishing retail sales taxes likely mean higher property taxes to offset the lost revenue.
But I don’t buy into this doomsday theory. Go to your local mall or Main Street and you’ll see families out shopping together. Retail isn’t just a transaction, it’s an experience. It gives people a way to spend time together. And it helps us get out of our houses to go see movies and eat at local restaurants that connect us to our hometowns. And there’s nothing like going to a mom-and-pop store and actually knowing mom and pop. These are our neighbors, and the care they bring to their work makes in-person retail experience something you cannot replace with a webpage.
So really the question is: on what terms should all retailers compete? Should everyone collect taxes according to the same standards, or should online retailers get a special exemption from collecting the taxes we already owe when we shop at their websites. For retailers and local communities, this isn’t just an academic debate, it’s a question of fair competition and balanced budgets. The time has come for a level playing field. Let’s not wait for more shops to close their doors and send their employees home. Let’s make Marketplace Fairness the law and let state and local governments collect their own taxes on their own terms.
Parker Hardy is the President and CEO of the Oak Ridge Chamber of Commerce.