Utah Congressman Jason Chaffetz says he wants to move beyond the “bumper-sticker” slogans that are lobbed against his bill allowing states to collect sales taxes off everything their residents buy online.
But along the way he throws out an argument of his own that, while perhaps a bit large for a bumper sticker, is nevertheless far more complicated than he makes it seem. It goes like this: People today walk into a retail establishment, test a product, then whip out their smartphones and order it online so they won’t have to pay sales tax, which is unfair to the retailer.
Chaffetz, who visited the combined editorial boards of the Deseret News and KSL recently, is carrying on a fight that has raged for at least two decades. At its heart, it concerns how you have learned to shop online and how much you’re going to pay.
It is a fight in which Utah long has been at the forefront. Former Gov. Mike Leavitt once led the charge as head of the National Governors Association. Today there is an impressive bipartisan unanimity among Utah’s political leaders, from Gov. Gary Herbert and Salt Lake Mayor Ralph Becker to state Sen. Curt Bramble, all leaders in their own national political organizations.
“I’m supposed to fight for what the people of my state want,” Chaffetz said. Whether it is winnable, however, remains to be seen.
But one thing is certain: When it comes to how we buy, sales taxes, and even price, are not always deciding factors.
A recent study by the professional services network PricewaterhouseCoopers found that only 32 percent of shoppers check out products in stores and then buy them elsewhere online.
On the other hand, 30 percent do the opposite. That is, they shop online for a product they want then go to a local retailer and buy it.
The former practice is called “showrooming;” the latter is called “webrooming.”
The same survey found people who buy online do indeed prefer lower prices, along with the convenience of 24-hour shopping. But those who buy in person do so for the tactile experience and the convenience of getting what they want immediately, without having to wait for shipping. They also like being able to return or exchange an item quickly.
Humans are complicated. Who knew?
So set aside the arguments about how the brick-and-mortar stores are suffering because of online sales. A lot of them have their own websites, anyway. The conservative argument in favor of allowing states to gather taxes from the things their people buy online centers on parity. As Chaffetz puts it, if you are obligated to pay the state a tax for purchasing a product from one seller, you shouldn’t be able to skirt that obligation by buying from another seller.
But there are other supposedly conservative arguments in the mix here, mainly having to do with taxation and business.
Over the years, this battle has tended to collapse under the weight of its own complicated nature, as well as because of one important consumer truth: Few people want to pay more taxes.
Chaffetz would call that another bumper-sticker misconception. In Utah, lawmakers passed a law that won’t let the state collect any more revenue because of online taxes. The overall tax rate actually would have to come down to accommodate the windfall.
But in many other states, collecting taxes from Internet purchases would suck more money from the economy, which is a delicate proposition in the post-recession era.
Chaffetz has tweaked his bill, called the Remote Transactions Parity Act, from earlier versions, to protect small online businesses in various ways.
Meanwhile, however, businesses already are required to collect taxes in any jurisdiction where they have a physical presence, a term that is much more complicated than it appears. It has led to a strange patchwork online that can be confusing to consumers.
The problem here is twofold. First, the 21st-century economy has innovated itself to a point where old tax structures no longer seem fair, effective or conducive to innovation. Second, the 21st-century world revolves around bumper stickers.
Chaffetz would do well to find one that best argues his point.