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Closing online sales tax loophole will create WI jobs

By   /   September 6, 2013  /   8 Comments

By State Rep. John Nygren

MADISON – A recent study was released regarding the economic impact of closing the online sales tax loophole. The author of the study, Art Laffer, was quoted as saying, “reinvigorating the U.S. economy should be the top priority for federal and state leaders.”

I couldn’t agree more. Job creation is vitally important to me and the citizens of Wisconsin and it should be for all elected officials. In his study, famed Ronald Reagan economic adviser Laffer argues that closing the online sales tax loophole could be a big boost to our economy.

I hope Congress is listening.

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FAIR IS FAIR: Rep. John Nygren, R-Marinette, says the government has to stop picking winners and losers in the marketplace, and an online tax would help check that practice.

Here’s the background. Under current tax rules, out-of-state, online retailers are allowed to skip out on collecting sales tax on purchases made through their websites. On the other hand, local businesses have no choice but to charge and collect sales tax – automatically putting Main Street retailers at a 5 percent price disadvantage simply because they happen to have a store in our state.

The current system of government picking winners and losers in the marketplace has created a disincentive for small businesses to invest in communities, hire workers and grow our economy.

The good news is that Congress is considering e-fairness legislation, known as the Marketplace Fairness Act, which would close the online sales tax loophole and level the playing field for all businesses. The bill has broad, bipartisan support in Washington and has already passed the U.S. Senate by a wide margin.

But here’s the best news of all: in putting together the tax reform plan included in the recently passed state budget, my colleagues and I included a provision that would require any increased sales tax revenue the state receives from passage of e-fairness legislation to be used to lower income tax rates.

This all leads back to the Laffer study. His research shows that if Congress closes the online sales tax loophole and Wisconsin uses the additional sales tax revenue to cut income taxes – as the state budget provision requires – our state will see over 23,000 new jobs and an additional $7.6 billion pumped into our economy.

Those of us who are old enough to remember know that this same formula – eliminating loopholes, broadening the base and lowering tax rates – is the same philosophy Laffer advised President Reagan to follow in the 1980s, which led to one of the longest periods of economic growth our country has ever seen.

In Madison, we are taking proactive steps to encourage job growth and business expansion. I will be sure to contact my congressman to emphasize that Wisconsin is ready for e-fairness legislation to pass so we can cut taxes further in Wisconsin.

John Nygren, R-Marinette, is co-chair of the Legislature’s Joint Finance Committee.

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M.D. Kittle is national First Amendment reporter at Watchdog.org. Contact him at mkittle@watchdog.org.

  • Joe

    John, I know you are a young man, but not that young. Please go to your local library and research the history of taxation. Brown county is yet to see relief of a 5.5% sales tax that was suppose to end when the stadium was finished and paid off. Miller Park is not going to go away either from latest indications. You are proposing lower taxes from a collection of another tax? I’m waiting.

  • Peshtigo Joe

    Hmmm, lets see, our small business sells our products nationwide. I cannot begin to fathom how many tax jurisdictions that we would be liable for collection of their sales taxes. Job creation? Yes, I will have to hire someone to file taxes for these agencies when the money could be better spent in improving infrastructure and hiring a person that would actually create a product to sell. Tax breaks? Can’t really say we have seen any and the so called income tax break, please donate mine to silent sport recreational development as that seems to be on the list of things our ruling body does not deem worthwhile to fund in the state.

  • scanman

    Another tax! Not going to stop it. Earmark the funds for property tax relief. At least then those that are paying taxes get some benefit. Keep all those on the “dole” from getting another freebie!

  • jlfonz1

    The problem? There is no way in hell that democrats would allow a new tax to imposed only to have an equal cut in a different area. Also there are seven states with no income tax to balance it with. Broke blue states would scream bloody murder if they couldn’t use the money to payoff their unions pals and allow the red states to pay for their bankrupt asses down the road.

  • CWFG

    John, remember the Transportation Fund raid by Governor Doyle? He used that money for his special interests and depleted the fund to such an extent that license and registration fees had to be raised to close the deficit caused by his misuse of segregated funds. A new tax will quickly become a grab-bag for democrats.
    So easy to spend other people’s money.
    PLEASE, NO NEW TAXES!

  • Big D

    What a load of crappy crap crap! Cut taxes by raising new ones? How stupid does he think we are? Job growth comes by consumers keeping more of their own money and spending it as they feel they need to, not by handing it over to the government. Internet businesses fill a consumer need or else they wouldn’t exist. If the local brick and mortar stores actually carried what I need, i would buy it from them. Unfortunately all to often I go to my local hardware or parts store to get something I need, only to be told they don’t have it in stock but can order it for me.Well I can order it for myself and have it delivered to my door and save the extra gas it would take to run back to town . The free market is working just fine, thank you. Leave it alone!,

  • Defend the Hand

    Well, if a government linked economist says it’ll be good for us, it must be true!

    Oh wait, didn’t some of them say Obamacare was going to be awesome?

    Never mind that its absurd to think you can “equalize” the marketplace between bricks and mortar and internet companies, the answer from a Republican should be to reduce the taxes on bricks and mortar companies, not to raise them on internet purchases.

    I’m going to say this for the cheap seats. Taxes reduce economic growth, EVERY time. The government CAN NOT create economic gains by arbitrarily deciding where scarce resources should be used.

    The people of Wisconsin should not have to pay higher prices for their goods and services because local retailers can not find a way to adequately meet their needs at a price they will pay. I’ll take the invisible hand over government meddling every day of the week and twice on Sunday.

  • go go

    John get it done. Also, please raise other taxes. We have two wars to pay off, and we need to take care of our service people who have been injured serving their country.

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