Marketplace Fairness Act

Marylanders will avoid paying sales tax on roughly $3 billion in online purchases this year.  That works out to $184.1 million in lost state sales tax revenue, according to projections by the University of Tennessee (see Table 5, page 11).  U.S. Senator Ben Cardin wants to do something about that, which is why he cosponsored the Marketplace Fairness Act last fall.

I've written about the need for an internet sales tax previously (Cyber Monday highlights need for internet sales tax). Now apparently Memorial Day online sales are becoming a thing as well.  As time goes on the percentage of purchases which are made online will continue to grow.  Unfortunately, given the status quo that means that the amount of sales tax Maryland can expect to collect will likely decline.

The state's bank account isn't the only victim here.  Not charging sales tax on online purchases hurts local retailers who can't compete on price because they have to collect the tax. Consequently local businesses and the state can't afford to hire more employees, which in turn means that retailers lose further sales.

While there are actions Maryland can take to collect on some of these purchases (the governor has a few ideas), this is one policy area that can only be resolved at the federal level.  The Marketplace Fairness Act is a good start, but I fear it will languish in Congress.