The Tennessean: Op-ed by Sens. Alexander and Corker: Fairness in taxes a decision for states to make
Posted on April 28, 2013
This past week, the U.S. Senate debated the Marketplace Fairness Act, an 11-page bill about two words: states’ rights.
The legislation — which would allow states to collect state sales taxes already owed on remote purchases from out-of-state businesses — is about letting states set their own tax policy without asking Washington’s permission. That’s the spirit of the 10th Amendment to the U.S. Constitution, and the spirit of this country.
The bill would allow Tennessee to reduce taxes or ward off budget pressure for a state income tax.
Gov. Bill Haslam faces this budget pressure and is among an honor roll of conservatives who support the basic free-market principle that all businesses and taxpayers should be treated the same. Republican Govs. Bob McDonnell of Virginia, Chris Christie of New Jersey, Rick Snyder of Michigan, Tom Corbett of Pennsylvania and Mike Pence of Indiana; former Republican governors Jeb Bush, Mitch Daniels and Haley Barbour; and conservative leaders such as Al Cardenas of the American Conservative Union and the late William F. Buckley Jr. rank as champions of this cause.
We join them and the 72 other Senate Republicans and Democrats who voted to debate the bill.
Our constitutional framework protects states’ rights. States have the right to be right, and they have the right to be wrong. This legislation would grant them that freedom and an opportunity to close a loophole — if they so choose — that currently chooses between winners and losers in the marketplace, which all supporters of the free market should oppose.
This is a straightforward issue, one that many states and their conservative elected leaders want to fix. As it stands now, they can’t do anything about the fact that online and catalog sellers don’t have to collect sales taxes in states where they sell their goods, while brick-and-mortar businesses do, giving remote sellers a significant price advantage not based on their business model, but on taxes.
If you walk into the Nashville Boot Co., try on a pair of boots and buy them, the store collects a sales tax and remits it to the state of Tennessee. But if you leave the store and instead order the boots on the Internet, the seller might not have to collect the tax. It’s up to consumers to report their purchases and pay the tax, but virtually nobody does. This bill simply says: A state may require all businesses, not just some, to collect the sales tax from people who purchase their products.
And this is not a tax on the Internet — there’s a federal moratorium against that. By requiring that businesses collect sales taxes, states would simply be ensuring they receive a tax that’s already owed. And businesses with $1 million or less in remote sales are exempted.
This issue has serious consequences, especially for states that want to keep taxes low and create jobs. Not having a state income tax, keeping taxes low and encouraging a favorable business climate have been very important for jobs in Tennessee. Our governor and other conservatives want to address this basic issue of tax fairness, and they and other states should be able to do so.
But that is for those states to sort out, something they can’t do right now. Our job in Washington is to give them the choice — to preserve the rights our Constitution affords them — and get out of the way.
Lamar Alexander and Bob Corker represent Tennessee in the U.S. Senate.