Over the last 10 years and the last five years in particular, the retail industry has fundamentally changed. More and more people are shopping online and our company has been at the forefront of innovative technologies that allow our customers to shop how they want, where they want, when they want. That includes online, mobile and in our brick and mortar locations.
One of the greatest threats to retailers and to state and local governments – which predates the internet – gives online-only sellers a huge competitive advantage over retailers with physical locations. Because of a 1992 Supreme Court ruling, online-only sellers like Overstock and Amazon, in many cases, are able to skip out on collecting the sales tax that is due, leaving their customers with the burden of paying the tax on their own. Many online-only retailers even engage in deceptive marketing campaigns by telling consumers a purchase from its site will be tax free. This discrepancy results in a perceived price advantage for out-of-state sellers of almost 10 percent in Illinois, hurting businesses like ours that have been investing in local communities for over 125 years.
When the sales tax is not collected by the merchant, the customer owes a use tax and is supposed to declare it when they file their taxes each April – much like a self-employed individual must pay any income taxes due when an employer is not withholding it. The problem with the use tax is that consumers rarely pay it and states simply cannot adequately enforce it. Turning a blind eye to tax avoidance has forced retailers, large and small, to shutter their doors taking the local tax base with them. Government is picking winners and losers and the losers are the job providers.
Poised to enact yet another bill leveling the playing field between its local retailers and online-only sellers, Illinois has done virtually all it can to end the current disparity. It’s time for Congress to act and restore basic free market competition. Last year, the U.S. Senate passed the Marketplace Fairness Act with strong bipartisan support. The bill was championed by Illinois Senator Dick Durbin (D) and a number of his Republican colleagues.
But since the Senate vote, the issue has languished in the House of Representatives. Congress should not let another day, let alone another holiday shopping season, pass without leveling the playing field for all retailers.
Ideally, if state and local governments are able to collect these taxes, governors and legislators throughout the country, including in Illinois, can look to lower taxes in other places as has already been proposed or committed to in a handful of states.
Leveling the playing field will empower businesses to compete and reduce the amount of lost jobs that have rippled across Main Streets throughout the country. I appreciate the action taken in Illinois and I urge Gov. Quinn and our congressional delegation to continue to press for a federal solution this year. So much damage has already been done – the time is now.
EVP and President, Online, Marketing, Pricing and Financial Services
This also appeared as an op-ed letter published by Crain’s Chicago Business in the magazine’s June 9, 2014 edition.