Guest commentary: Close online sales tax loophole

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Requiring everyone to operate under the same set of rules is a simple tenet that applies to our daily lives in everything from sports to speed limits.

After all, there arenít separate speed limits on highways for blue cars and red cars. And the Packers and Bears play by the same rule book when they face off against each other.

THAT NEED for a level playing field is also important in business.

Businesses like mine know we have to offer great service, great prices and great value or people will shop elsewhere. All we expect is that as we compete for customers with our competitors that we all play by the same set of rules.

Unfortunately, thatís not the case today when it comes to sales tax collection. A pre-Internet era Supreme Court decision allows out-of-state, online businesses to avoid collecting sales tax, while stores that have a physical presence in a state are compelled by government to charge and collect the tax.†

THIS LOOPHOLE allows out-of-state, online businesses to offer an artificial price advantage of at least 5.5 percent that has nothing to do with their business model. Instead, the price advantage is created by government dictating different rules to businesses that are offering the same exact products and services. †

To make matters worse, potential customers use brick and mortar shops like mine as a showroom to touch, feel and learn about an item before going online to buy the same product without having the sales tax charged.†

That doesnít mean online purchases are sales tax free. They are not. Instead, consumers are supposed to pay the sales tax, called a use tax, when they file their annual tax return.† Of course, almost no one does that.

THE IMPACT of the current system is that businesses that maintain a presence in local communities are being penalized for doing so.†

The good news is that there is a simple solution to this problem. Legislation closing this online tax loophole passed the U.S. Senate with a broad bipartisan vote in May. All that is left is for the U.S. House to take up the measure known as the Marketplace Fairness Act.

Even more good news is that, thanks to the state budget Governor Walker recently signed into law, the state of Wisconsin is poised to use revenue that comes in from Congress passing the Marketplace Fairness Act to lower income taxes.

ACCORDING TO a new report by Dr. Art Laffer, who was one of the key architects of President Ronald Reaganís economic policies, Wisconsin would see an additional $7.6 billion pumped into its economy over the next decade and 23,701 new jobs by using additional sales tax revenue to lower income taxes.†

Lower taxes, job creation and a level playing field for local business is a win-win scenario I think we can all get on board with.†

Letitia Erdman is the owner of I Love Funkyís in Lake Geneva. She has been a small business owner in the retail sector for over 35 years.

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