The US Senate today approved cloture on debate on the Marketplace Fairness Act (MFA), a bill that would finally allow states to collect sales tax from out-of-state resellers. The motion to end debate and proceed passed the Senate by a 70 to 20 margin, indicating that there is more than enough support to carry the bill through final passage, a vote that could come as soon as Thursday.
The bill would then move to the Republican-controlled US House, where its prospects are considerably bleaker. "The chair is not supportive yet, so we haven't got a hearing," Representative Suzan DelBene tells me. DelBene, the freshman Democrat from Washington's 1st Congressional District sits on the House Judiciary Subcommittee on Regulatory Reform, the body that would initially hold hearings on the bill assuming the Republican leadership allows hearings to be held. DelBene says that there is bipartisan support for the bill, but that Judiciary chair Bob Goodlatte (R-VA) is at best "lukewarm."
At stake is an estimated $11 billion a year in uncollected taxes, more than $1 billion in state and local taxes per biennium in Washington State alone. "It has such a huge impact on state an local revenues," says DelBene, a former Washington State Department of Revenue (DOR) director.
DOR spokesperson Mike Gowrylow confirms that thanks to our participation in the Streamlined Sales and Use Tax Agreement, the state would be ready to begin collecting revenue in 2014. In February, DOR estimated that MFA would generate $284 million in additional state and local revenue for the 2013-15 biennium, rising to $1.1 billion by 2017-2019 as compliance improved.
That would sure would make writing future budgets a little easier compared to the current Olympia shitshow.
So why the Republican opposition in the House? The no-new-tax-under-any-circumstance Grover Norquist wing of the GOP has declared the MFA to be a tax increase. It is not. Technically, states already require residents to declare and pay a "use tax" on out-of-state purchases. Almost nobody does. The MFA would merely enable collection.
And many online merchants (me included) have long feared that interstate sales tax collection would impose a backbreaking burden on small businesses. But the MFA addresses those concerns, exempting remote sellers with less than $1 million a year in sales, and shifting much of the cost of collection onto the states. I've checked out some of the free online sales tax collection software that's already out there. It looks pretty good.
As the most sales tax dependent state in the nation, Washington's got the most to gain from the bill's passage. Yet none of our state's four Republican representatives have taken a public position on the bill. "Voters need to ask them where they stand on it," urges DelBene.
And while you're at it, you might want to ask Cathy McMorris-Rodgers, Dave Reichert, Doc Hastings, and Jaime Herrera Beutler to place the interests of Washington State above those of Grover Norquist.