Internet Taxes

Published April 16, 2013

The Tribune’s April 8 editorial “Online vs. on the corner; Time to put dot-coms on par with your local store” is off base on Internet taxes. The playing field is already level; placing a new tax and ripping apart the physical-presence standard defined by the Supreme Court would tilt the field decidedly in favor of traditional big-box stores.

This proposal would increase the cost for purchases made online or by mail-order and open taxpayers up to a Pandora’s box full of new possible taxes.

Currently states tax consumers based on where the business is located — also known as “origin-based” taxation. The Marketplace Fairness Act would allow states to tax consumers not where they buy the product from but where the customer is located. This is known as “destination-based” taxation.

By having two types of taxation systems and eliminating the physical-presence standard, the MFA would undermine tax competition among the states, hinder the growth of a rapidly expanding industry and regressively burden consumers.

The Tribune is right that it’s time for a consistent set of rules for the collection of taxes on online purchases and that is why both online and brick-and-mortar retailers should be taxed based on origin.

[First published in the Chicago Tribune.]