Michigan is projected to lose more than $4.5 billion in tax revenue over the next five years, according to the Marketplace Fairness Coalition, unless Congress acts to promote fair competition between Main Street retailers and internet-only sellers. The uncollected revenue translates to less spending on teachers, infrastructure and law enforcement.
Nationally, states are projected to lose more than $211 billion from a legal loophole allowing some online retailers to avoid collecting sales tax during a transaction. While consumers are liable for paying what’s owed, few do, giving online stores a strong advantage over Main Street competitors.
In 2015 Michigan enacted its own solution, narrowing the loophole by requiring larger Internet retailers that fit certain business criteria and sales thresholds to collect and remit the 6 percent sales tax.
However, remaining online stores that don’t fall into that category are still selling goods to Michigan residents without collecting and paying the sales tax.
The American Farm Bureau Federation is backing two bills, the Remote Transactions Parity Act of 2017 and the Marketplace Fairness Act of 2017 that would allow states to apply sales tax laws uniformly.
“The businesses that line the streets of our nation’s small and rural towns provide essential goods and services to the farmers and ranchers who work the fields that surround them. But hometown businesses are at a disadvantage when they compete with online-only retailers who don’t have to collect sales taxes. When this disadvantage causes a ‘Main Street’ business to close or scale back, the impact is especially hurtful to already struggling small and rural towns,” AFBF President Zippy Duvall said in a letter to lawmakers encouraging them to support the bills.
Support other tax reforms important to the agriculture industry by visiting our Legislative Action Center to send a letter asking to replace the current federal income tax with a simple, transparent and fair tax system that encourages success, savings, investment and entrepreneurship.