Debate Over Internet Tax In Ohio Focuses On Fairness

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A bill that would allow states to collect internet taxes from businesses that don’t have a physical location in that state united both Republican senator Rob Portman and Democratic senator Sherrod Brown in support last year.  But opponents point to a new poll that shows Ohioans overwhelmingly oppose the idea.

"Ohioans don't like this idea that would allow out-of-state revenue agencies to force Ohio businesses to collect and remit their sales taxes even though they're based here in Ohio," said Andrew Moylan, Executive Director of the R Street Institute.  "It's not fair and it wipes away a key protection that we have where we say to revenue agencies you can't require a business to collect and remit your tax unless that business is physically in your jurisdiction."

The Marketplace Fairness Act, supported by Portman and Brown along with central Ohio Representative Steve Stivers, would allow states to require out-of-state online and catalog businesses to collect and remit sales tax from residents.

“It's a very different world today than 5 years ago, 10 years ago,” said Brown.  “I want to make sure that all of us understand this.”

A poll released Thursday by the National Taxpayers Union and R Street Institute shows that Ohioans oppose by a 56%-31% margin the Marketplace Fairness Act.

"Imagine an Ohio business having to face an audit from California when agents come into their establishment and say we want to see every line in your books," said Pete Sepp, Executive Vice President of the National Taxpayers Union.  "We need to require all retailers to collect sales tax only once for the jurisdiction in which they're located."

Right now states can only collect sales tax from businesses that have a physical presence and brick-and-mortar retailers have complained this gives online retailers an unfair advantage.