Michigan looking to expand sales taxes online

Something’s cooking in Motor City and it’s not an engine with a blown radiator. The Governor of Michigan is looking to put some additional coin in his state’s coffers while promoting local business activity. And how does he plan to accomplish this feat? He wrote a letter to the Senate.

Gov. Rick Snyder is urging the U.S. Senate to pass legislation that would allow Michigan to extend its 6 percent sales taxes to purchases from out-of-state Internet retailers.

Snyder sent a letter to senators this week endorsing the Marketplace Fairness Act, which would enable states to collect sales taxes from online retailers like Amazon and Overstock.com.

“By enabling remote sellers to ignore the collection of sales and use taxes, it provides them an unfair competitive advantage and threatens the viability of retailers throughout our communities, many of which are locally owned small businesses that reflect the unique character and culture of the Great Lakes State,” Snyder wrote in a letter sent Monday — and obtained Friday by The Detroit News — to Senate Majority Leader Harry Reid of Nevada and Minority Leader Mitch McConnell of Kentucky.

We’ve talked about the Marketplace Fairness Act here before, with the vast majority of you disapproving. This is the first time I’ve seen it crop up in Michigan, though. So how much money are we talking about here? The Michigan treasury department estimates, “the state will lose $872 million in uncollected sales taxes in the 2012 and 2013 fiscal years” because of online commerce sales going untaxed.

Also of note is the fact that Rick Snyder is no tax and spend liberal. He’s a Republican who campaigned on eliminating deficits and has been working to remove or consolidate taxes on businesses. He’s even been mentioned as a possible VP pick this year, though I’d say he’s pretty far down on the list at this point.

I’m sure there’s some politics at work here as well, but the general spin seems to be that Snyder wants to support local small businesses (as well as they jobs they provide) by making online sellers compete under the same tax burden. Will it work? Republicans suggesting that anyone pay more taxes don’t tend to fare very well. Snyder may be no exception.

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