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Published: Wednesday, April 24, 2013, 12:01 a.m.
In Our View / Marketplace Equity Act

Boost mainstreet retailers

Federal lawmakers should come together in common cause to unscramble a tax dodge that squeezes small business while sapping state coffers.
The Marketplace Equity Act will correct a pre-Internet-era wrong by unsnaring a loophole that permits online-only retailers from collecting or remitting a state's sales' tax if they're physically located somewhere else. In practice this gives online outfits up to a 10 percent price advantage over local retailers.
In Washington state, with its no-income-tax obstinacy, the retail sales' tax remains the state's prime revenue spigot. As a result, Washington residents get buffeted by the understated wisdom of the late Sen. Everett Dirksen. A million here, a million there. Pretty soon, you're talking real money.
In Washington, D.C., freshman Rep. Suzan DelBene has been leading the charge on marketplace equity. A vote on the bill is likely Thursday in the U.S. Senate, with both Sens. Patty Murray and Maria Cantwell expressing support. The question mark is what will happen in the U.S. House, and if the bill can wriggle out of the Judiciary Committee (DelBene is a committee member.)
"We have to support small businesses to create jobs and help grow our economy," DelBene said. "The existing loophole unfairly hurts local retailers, many of which are small businesses, by giving out-of-state retailers an unfair advantage. This legislation updates our laws for a 21st century economy, addresses an inequity in the marketplace and helps ensure everyone plays by the same rules."
One of the bill's prime sponsors, Rep. Jackie Speier of California, noted in a compendium of the bill that, "This special treatment has the effect of the government picking winners and losers in the marketplace, and local businesses simply cannot compete over the long-term with online giants that have a competitive advantage based on government policy."
The genesis of the online-tax dodge loops back to 1992, that pre-Google Stone Age, when the U.S. Supreme Court ruled in Quill v. North Dakota that states can't force the tax-collection question unless Congress authorizes it. Because online retailing is tangled with interstate commerce, any corrective needs to emanate from the feds and not the states.
What, then, of non-big shot retailers who market and sell online? The legislation contains a critical small-business exemption that lets companies off the tax-collection hook if they generate $1 million or less in sales nationally.
The argument for marketplace equity hangs together so cleanly that the proposal has earned bipartisan support. In Congress' ante-logjam days -- before many of us were born -- consensus would be sufficient to ensure passage. Not today.
All members of the Washington delegation, including undecided members such as Dave Reichert and Jamie Herrera Beutler, should sign on.

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Herald Editorial Board

Jon Bauer, Opinion Editor:

Carol MacPherson, Editorial Writer:

Neal Pattison, Executive Editor:

Josh O'Connor, Publisher:

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