After the Thanksgiving leftovers are packed away this week, millions of Americans will turn to their laptops, tablets, and smartphones to scour the internet for deals and purchase billions of dollars of goods online.
Last year alone, 103 million people shopped online during the Thanksgiving-Black Friday weekend, reflecting the vast growth in e-commerce. Consumers spent nearly $3 billion on Cyber Monday alone in 2015 – setting a record since the shopping phenomenon started 11 years ago. Meanwhile, spending in physical stores reportedly fell 10 percent from last year on both Thanksgiving Day and Black Friday, according to retailing research firm ShopperTrak.
It's no surprise e-commerce sales have skyrocketed in the last decade, accounting for an increasing share of retail sales nationwide. Need a mattress, toilet paper, diapers, or a new pair of shoes delivered by the weekend? With just a simple click online, you can have it all on your doorstep.
Unfortunately, Congress hasn’t caught up with the rest of the country, and has failed to pass federal legislation to level the playing field between online and bricks-and-mortar retailers. That means shoppers can browse goods in person at local main street retailers and order the product online tax-free. This outdated and unfair online sales tax loophole puts local businesses at a disadvantage when competing against online competitors.
I know. I run a third-generation family business based in Williamsport, Pa., the Robert M. Sides Family Music Centers. We were founded in 1937. Our staff of over 90 people support customers in 5 stores in Central Pennsylvania and New York providing sales, rentals, repairs and lessons for all types of musical instruments and accessories.
This tax loophole also means states are missing out on an estimated $23 billion annually – revenue they could use to hire more teachers, firefighters, and police officers. That’s why a bipartisan group of governors are calling on Congress to act. Arkansas Gov. Asa Hutchinson called on Congress to "set up a fair mechanism for states to collect sales taxes on Internet sales." Mississippi Gov. Phil Bryant, Iowa Gov. Terry Branstad, Maine Gov. Paul LePage, Oklahoma Gov. Mary Fallin, and South Carolina Gov. Nikki Haley have all come out in support as well.
The president-elect has said online retailers should pay sales tax because of the devastation it brings to local businesses, and the vice president-elect supported e-fairness as the governor of Indiana. A bipartisan majority of lawmakers in Congress on both sides of the aisle support closing the loophole. Now Congress needs to act.
In the face of Congressional inaction, courts have stepped in, creating legal chaos and uncertainty for businesses and states. Alabama faces an ongoing lawsuit from a computer hardware retailer, which sued the state for a law it recently enacted to collect taxes on online sales. Colorado petitioned the U.S. Supreme Court on Oct. 3, 2016 to rule on an online sales tax case; 11 other states joined Colorado, urging the Supreme Court to act on this case. And recently, the Ohio Supreme Court ruled the state can impose a commercial activity tax on internet retailers who don't have a physical presence in the state, a likely predecessor to a similar challenge on remote sales.
All this litigation, chaos, and uncertainty, prompted by Congress' lack of action, is not the answer.
As members of Congress return home for Thanksgiving, they should remember the livelihood of their districts' main street businesses depend on fair competition. Closing the online sales tax loophole will level the playing field for the shop down the street and the store on your phone. It will create more certainty for states and communities. With widespread bipartisan support for e-fairness, there's no reason Congress shouldn't act this year.
Mr. Sides is President of the Robert M. Sides Family Music Centers, which as locations in New York and Pennsylvania.
The views expressed by authors are their own and not the views of The Hill.