Last month we noted that Michigan had joined the list of states where governors and legislatures were wrestling with the issue of lost tax revenue through internet sales. (The “Amazon tax” concept, as it’s come to be known.) Now yet another voice has jumped into the debate and it comes from one of the rising stars of the GOP. Chris Christie has made the move to support the idea of the Marketplace Fairness Act at what may seem an odd time… just as Amazon announced that they will be setting up shop in the Garden State.
Online retail giant Amazon.com plans to build two huge distribution centers in New Jersey, creating what Gov. Chris Christie said today will be 1,500 full-time jobs.
But New Jerseyans intent on buying a big-screen TV or laptop computer should act quickly: Come July 2013, Amazon will start collecting a 7 percent state sales tax — whether or not the sprawling warehouses are built.
“We will now in the state of New Jersey begin collecting sales tax at least from a fraction of the market we otherwise would not have gotten,” Christie said at a Statehouse news conference, adding the deal would also lead to “thousands” of part-time, seasonal and construction jobs.
Amazon and other out-of-state online retailers currently do not collect the 7 percent sales taxes from New Jersey customers that in-state merchants are required to charge. Although residents are supposed to pay the levy when they file their income tax returns, few do.
Regular readers know that I’ve been on the fence about this question ever since the MFA first surfaced, but reading Christie’s comments has highlighted two points for me in a way I hadn’t considered before. First there’s the issue of a “new tax” and the reaction that generally gets from fiscal conservatives. Read the last line of the quoted text again for an important reminder on this. In most of these cases, just as in New Jersey, there was already supposed to be a tax being collected. The theory was that the government wouldn’t collect it, but people would voluntarily report those purchases when tax time rolled around and just send the money in. So how did that work out? When you finish laughing you’ll note that it worked precisely as well as you thought. Nobody did it.
The second, and perhaps more important part, comes from this video of the Governor’s remarks on the MFA. There’s an important distinction between various proposals which have surfaced to tackle this problem, and Christie highlights one of the more important ones. (Remarks come at the 6:27 mark if you want to skip ahead, but the video is full of good information. I’ll embed it below.)
“I just want to make clear…I’ve been working on this issue in my role on the executive committee of the National Governors Association, because it is an important issue to all of the Nation’s governors. I too, along with governors like Governor Daniels and others, urge the federal government and the Congress, in particular, to get behind Senator Lamar Alexander’s legislation to allow states to be able to make these choices for themselves. I think Senator Alexander’s legislation would be a great step forward, in that regard. It would give states options to decide how they want to deal with this and not have to any longer deal with the federal prohibition dealing with it. So, it would allow us to do it in a much more uniform and broader way. So, I’m with Governor Daniels on this and other Republican governors – Governor Snyder of Michigan and others who feel strongly about it.”
(Emphasis mine.) Among different ideas, some of the worst concepts were ones which had me worried that this would turn out to be some sort of federal mandate to collect the tax. (Or worse, have Washington collecting one itself.) If it turned into some sort of de facto federal tax scheme it was dead on arrival. But Christie’s take on it highlights the need for Washington to “get out of the way” and simply allow each state to handle the question of collecting sales taxes on internet sales as they see best. I think that’s something very different.
And besides, don’t forget who is saying this. Christie’s untouchable, so this should seal the deal. Let’s face it… the guy is going to wind up either being President or Emperor of the Holy Roman Empire and ruling the world. Do you really want to cross him?
Here’s the video from above so you can listen to the governor’s remarks and judge for yourself.