It seems that simple.
Retail sales are shifting to the internet, first as a niche phenomenon, then as a tide. The US Supreme Court is making an important decision that will pave the way for states to impose a tax on these online sales, just like brick and mortar businesses do. If the need is not yet apparent, the COVID-19 pandemic is accelerating the trend away from personal trafficking. Jeff Bezos now has enough money to start his own space program.
Most lawmakers received the memo after the 2018 South Dakota Supreme Court ruled against Wayfair that states could require distant businesses to collect and remit a tax on sales over the internet. Previously, courts had ruled that tax collection was largely limited to companies with a physical presence in a particular state.
As part of Wayfair, states that already levy sales tax sought to introduce “economic nexus laws” that would enable them to generate revenue from direct dotcom sellers and from market middlemen like Amazon or eBay who make nothing but make one significant share of online trading.
But not Missouri. Show-me state remains a persistent problem despite persistent evidence that the time has come to modernize tax law to reflect the reality of people buying.
Part of that is a question of fairness. With some brick and mortar retailers struggling to survive, online competitors offer convenience and choices that can be difficult to obtain. There is little to be done about that, but the state should actually improve the playing field by requiring buyers to be subject to at least the same tax on every purchase, whether in person or online.
Then there is the problem of the viability of local government. Cities and counties rely on sales tax to pay for essential services, from parks and policing to filling potholes, but they are missing out on a major source of income in today’s economy.
A Missouri House committee was due to hear competing versions of the legislation Wednesday to begin taxing online purchases. These measures have similar objectives, although there may be differences in how an online tax relates to an existing local use tax and when local jurisdictions may need to give voter approval.
Another issue is whether Missourians should get income tax breaks to offset higher income from an online sales tax. State MP Bill Falkner, a former mayor of St. Joseph, said discussions about income tax should best be left to the budget committee to consider education funding, Medicaid expansion, and other government needs.
Do we agree? An income tax cut would be nice, but it shouldn’t be the roadblock that is keeping Missouri from sharing online sales tax with the rest of the country.