Closing a Job-Limiting Tax Loophole

Congress is currently considering a change in tax regulations that would support local businesses and create more jobs for people in the community.

The Problem
Technology seems to have gotten ahead of the country’s sales tax laws. Internet retailers say they’re exempt from collecting sales tax in states where they do not have a physical presence; states argue that sales taxes are already due on all sales and should be collected at the point of purchase.

This tax loophole puts traditional, brick—and-mortar businesses—the backbone of their communities-at a distinct competitive disadvantage to remote sellers who don’t collect sales tax. This can lead to stores shutting their doors for good and jobs being lost.

In the U.S., there are more than 12 million shopping center-related jobs. One out of every 11 U.S. jobs is shopping center-related and for every 100 individuals directly employed at regional shopping centers, an additional 20 to 30 are supported in the community. This means that a decrease in retail sales will have a ripple effect on other businesses that provide jobs, such as restaurants, movie theaters and gas stations.

Moreover, states are losing critical funding, at a time when it is needed more than ever, for schools, law enforcement, first responders, government services and the jobs they provide.

“While the Internet marketplace has rapidly expanded, tax collection for e-commerce sales lags woefully behind,” said William F. Fox, director of the Center for Business and Economic Research at the University of Tennessee. “We urgently need a new commonsense solution for both consumers and businesses.”

A Solution
That’s where the Main Street Fairness Act comes in. It is expected to create a viable and equitable solution for both online and brick-and-mortar retailers.

Through the Act, Congress gives states the ability to require out-of-state vendors to collect and remit sales taxes. It grants that authority particularly to states that have simplified their tax codes through the Streamlined Sales and Use Tax Agreement.

Explained Michael Kercheval, president and CEO of the International Council of Shopping Centers, “The Main Street Fairness Act will give retailers a level playing field, allowing them to continue creating jobs and protecting local economies.”

Learn More
For more information, visit http://www.icsc.org/mainstreetfairness or call (202)626-1400.

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