The federal government has a policy that directly puts Main Street brick-and-mortar retailers at a competitive disadvantage.
The policy, which has been in place since the 1992 Supreme Court decision Quill v. North Dakota, is the prohibition on local and state governments collecting sales taxes from out-of-state online sales.
In a state like Texas, with a sales tax rate of 6.25 percent, this makes purchasing from retailers located in Texas that much more expensive than buying online — a federal government-mandated competitive advantage for those who don't directly contribute in any way to the local economy.
It has now been more than a year since the Senate passed legislation on this inequity and it is time for the House to act and restore state control over the collection of sales taxes. And that is one of this debate's great ironies — all that House members like Jason Chaffetz (R-Utah) want to do is effectively return the choice of whether to collect these out-of-state online sales taxes to the states, a position supported in principle by many opponents of reforming the law.
The truth is that you cannot honestly argue for returning control from Washington to the states and then say "but not in this case." For those of us who continually promote the devolution of government to local levels, we cannot say "unless the states might choose to do something we don't like." That kind of dishonesty only flies on the left side of the aisle.
One proposal by Rep. Steve Womack (R-Ark.) called the Marketplace Fairness Act would allow states to enter into mutual agreements to collect out-of-state sales tax if they choose. This approach does not dictate state outcomes, but instead allows those representatives elected to state government to make decisions to create revenue-neutral or even tax-cutting adjustments to offset any newfound funds.
And that is how it should be.
It is time for Congress to get out of the business of picking retail winners and losers by neglecting to allow state governments to level the retail sales-tax playing field. It is a wise choice from both a federalist and economic policy perspective.