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The Wall Street Journal Is Wrong About E-Fairness Legislation

March 16, 2018

Washington, D.C. – Today, the Marketplace Fairness Coalition released a statement in response to a Wall Street Journal editorial on online sales tax legislation:

"The WSJ ed board's piece on E-Fairness is completely inaccurate and wholly mischaracterizes legislation that restores market fairness without creating any new taxes. The WSJ ed board is wrong when it says states aren't losing out on sales tax revenue – this year alone $33 billion in sales taxes owed will go uncollected because of the online sales tax loophole."
 
The Wall Street Journal's editorial board's piece on E-Fairness is inaccurate and misconstrues the truth about E-Fairness. Here are the facts:

  • E-Fairness legislation is not a new tax. It simply authorizes enforcement of existing state laws. Currently, online sales transactions are subject to a use tax equal in amount to the tax that would be charged at the physical point of sale. E-Fairness merely creates a simple mechanism to allow taxpayers to meet their existing tax obligations. In fact, national polling shows once consumers learn that they are supposed to pay the tax, even if the seller does not collect it, they actually prefer that the sales tax be collected and remitted for them as is done by brick-and-mortar sellers on every purchase.
     
  • Congressional action can provide the simplifications and protections small businesses need. A single federal standard will reduce compliance costs of remote sales tax collection.
     
  • State sales tax revenue is decreasing across the country to the tune of $33.9 billion in this year alone due to the online sales tax loophole. Many states and cities have considered increasing taxes to address falling sales tax revenue, in part due to the online sales tax loophole.
    • Over the next five years, that number increases to $211 billion in lost remote sales tax revenue for states.
    • Alabama, Arizona, Arkansas, California, Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Nebraska, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina,  South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, and Wyoming have all lost considerable amounts of sales tax revenue causing many to enact legislation of their own or raise taxes on residents.
  • E-Fairness creates a level playing field for brick-and-mortar and online sellers. The reality is online sales are increasing, and our outdated tax system holds brick-and-mortar merchants to a different standard than online sellers, putting Main Street and small businesses at a disadvantage.