Majority don't want taxes collected on out-of-state online sales

By Marc Kovac


A majority of Ohioans think it’s a bad idea to force online retailers to collect and remit sales taxes to states where purchases are made, according to a poll released Thursday by a conservative think tank that also opposes the setup.

The R Street Institute and the National Taxpayers Union say the results should prompt Ohio’s congressional delegation to think twice before backing federal legislation on the issue.

“From our perspective, this is a really dangerous expansion of state tax authority,” said Andrew Moylan, executive director if the R Street Institute. “We have a system where states are rightly sovereign within their own borders, but their power ends at borders’ edge, because we can’t have states trying to exert control over commerce in other states.”

But the head of an Ohio business group said his members support the “Marketplace Fairness Act” as a way to ensure in-state and out-of-state sellers are on even ground competitively.

“We think that all retailers — regardless if they’re online only or brick and mortar and online — they should collect sales tax,” said Gordon Gough, president and chief executive officer of the Ohio Council of Retail Merchants.

In Ohio, consumers already are required to pay sales taxes on out-of-state online purchases, whether retailers collect those taxes or not. Businesses with a physical presence in the state are required to collect sales taxes on purchases.

But federal legislation seeks to expand the authority of states to require out-of-state businesses to collect sales taxes and send the proceeds back to the taxation officials where consumers are located.

R Street and the National Taxpayers Union decided to poll Ohioans on the issue; about 400 likely voters in the state responded to a telephone survey early last month.

Among the results, 56 percent of respondents said they opposed allowing states to require online retailers to collect sales taxes on out-of-state purchases. More than 60 percent said they seldom or never buy things online.

The results have a margin of error of about 5 percentage points.

Moylan acknowledged arguments from supporters of the Marketplace Fairness Act, but he said the result would not be fair to all of the businesses involved.

The proposed federal legislation “would create a totally unlevel playing field where, if you’re a brick-and-mortar retailer, you get to use this simple, easy standard of collecting based on where you’re located whereas you would be forcing online businesses to have to jump through all of these hoops to figure out tax obligations across the country.

He added, “There are 46 states with sales taxes, there are 9,998 separate taxing jurisdictions across the country. Asking online businesses to be accountable for all of those ... is the exact opposite of a level playing field.”

But Gough said his members are required to collect sales taxes for purchases made at their Ohio stores, and others should be, too.

“It’s a fairness issue,” he said. “For brick-and-mortar retailers required to collect and remit the tax, that other retailer that’s online only should have the same responsibilities. ... We think it’s more responsible to collect the money from all retailers than to say let’s not collect any sales tax at all. Let’s be fair.”

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