Marketplace Fairness Act

May 13, 2014 | Retail
By O. Randall Woodbury

Marketplace Fairness Act

Retail
By O. Randall Woodbury
Marketplace Fairness Act

One year ago, the US Senate overwhelmingly passed the Marketplace Fairness Act. This legislation will help level the retail playing field between “clicks” and “bricks,” requiring online retailers to collect and remit sales tax to the states from whence purchases are made, just like brick and mortar retailiers are required to do. The issue remains stalled in Congress.

"I urge Congress to stop dodging the issue and pass the legislation."

It is estimated that states lose $23 billion each year in online sales tax that would have been collected through traditional retail venues. There has been much speculation over the issue, however, I now read of recent research by Ohio State University that seems to give quantified support to the claim. They report to have tracked 245,000 Amazon customer households since early 2012, concluding that Amazon’s sales dropped an average of 9.5% in those states that now require collecting taxes on online sales. They also report a 2% sales increase in those states from brick and mortar retailers. While connecting those dots accurately will be a challenge, it certainly seems to validate the argument.

As owners and managers of a large portfolio of shopping centers, we are sympathetic the challenges our tenants face competing with the online world. That said, online shopping continues to grow each year and the truly savy retailers are those that are learning to navigate both sides. I urge Congress to stop dodging the issue and pass the legislation. The bricks and clicks will finally be playing by the same set of rules and the real winners will be state revenue coffers.