Pay what is owed

In most cases, if you owe a tax, you have to pay it – except when that tax is a sales tax and it’s owed on an item you purchased online.

Buyers still owe the tax, of course – there is a line on their Wisconsin income tax forms. But few pay it voluntarily, which puts local brick-and-mortar retailers at a competitive disadvantage and costs the states billions of dollars a year in tax revenue.

No one wants to pay more taxes, but paying the taxes one owes only seems fair. Retailers are not now required to collect sales taxes from states where they do not have a physical presence – or what is known as a nexus – and so most of them do not. Congress should require retailers to collect sales tax across state lines.

The states, which lose an estimated $21.5 billion to $33.7 billion in revenue each year, have been organizing to persuade federal lawmakers to take such an action for years.

Wisconsin and 40 other states have approved streamlined tax rules; Wisconsin also is among 23 states that have passed enabling legislation. The streamlined rules aim to standardize what is taxable and to simplify rates. There are more than 7,000 taxing entities in the United States, so standardization is essential.

Sales tax avoidance is nothing new. In the past, taxpayers often could skip paying the taxes on catalog sales. But the rapid growth of online retailing has made the practice much more common. Although online shopping is often more convenient, the prospect of avoiding sales tax, especially on the purchase of bigger-ticket items such as a television or camera, is appealing.

“We believe when online retailers don’t have to collect sales tax, they enjoy an unfair advantage,” said Craig Sherman, vice president for government affairs at the National Retail Federation in Washington, D.C.

We agree. As a matter of simple fairness, Congress should force all online retailers to collect the tax.

Copyright (c) 2010, Milwaukee Journal Sentinel/Distributed by McClatchy-Tribune Information Services

Tags: guest editorial, opinion, wisconsin, taxes, government