USA Today: Consumers, advocacy groups largely silent on sales tax
media mentionJayne O’Donnell USA TODAY9:30 p.m. EDT May 6, 2013
Shoppers may flock to free shipping offers, but the online sales tax debate hasn’t interested consumers nearly as much.
Maybe it should.
Sales taxes, after all, can cost as much or more than shipping — at times about 7% to 8% of a product price. They are just a much grayer area and often are a charge that doesn’t show up in the total until it’s time to click “purchase.”
Online retailers currently only have to collect sales tax from buyers who live in states where retailers have a physical presence. That’s the result of a 1992 Supreme Court decision. Shoppers in other states are supposed to keep track of their online purchases and pay the equivalent of the sales taxes when they file their state income tax returns.
Most taxpayers don’t. Only about 1-in-100 Wisconsin taxpayers submitted sales taxes when they filed their 2010 income taxes, according to a 2012 story by the non-profit public affairs channel WisconsinEye.
The proposal passed by the Senate today would change that by requiring retailers to collect applicable state sales tax for all buyers.
Shoppers need to keep in mind that sales taxes don’t “just pay for the road that connects the consumer’s house to the retailer,” says Carl Davis, senior analyst for the Institute on Taxation and Economic Policy. The tax benefits consumers in areas from education to police protection.
The institute, part of the non-partisan policy group Citizens for Tax Justice, favors sales tax collection for online sales, even though sales taxes in general hurt low-income families the most.
“It’s not a perfect tax, and there’s no argument that it’s definitely regressive,” Davis says. “But it really has to be applied to all retail sales.”
Consumers Reports spokesman C. Matt Fields says the consumer advocacy group hasn’t taken a position on the tax. ” I think our organization is just really focused elsewhere at the moment,” Fields says.