Between July 1, 2013 to June 30 2014, U.S. retailers tallied more than $280 billion in online sales, and this figure is expected to jump to $370 billion by 2017. The first quarter of this year alone saw 198 million Americans make at least one purchase online. As Business Insider notes, that figure would constitute about 78% of the U.S. population aged 15 and older. Not surprisingly, millennials lead the way in online shopping, with the average member of Generation Y spending $2,000 online last year, with Generation X coming in a close second at $1,933:
One of the appeals of online shopping is the lack of a sales tax on most purchases. Although shipping and handling costs typically apply, many online shoppers are happy to trade a few bucks in exchange for the convenience of buying goods online sitting in their underwear instead of buying goods at Walmart while standing in their underwear. And if you shop online frequently enough, enrolling in programs like Amazon Prime that deliver free two-day shipping can be well worth the investment.
A Gallup poll conducted last year showed that 57% of Americans oppose any law that would allow states to collect taxes on purchases made online, with 73% of 18-29 year olds against. But last year, the U.S. Senate passed a bill that would permit states to do just that. The measure would allow states to levy taxes on purchases from retailers that don’t have a physical presence in the state in which the buyer resides. This physical presence has been interpreted by the Supreme Court to mean having a store, office, warehouse, or sales representative within the state of the person making the purchase.
The Senate roll call was 69-27 in favor in a vote that split the Republican caucus, with 22 of them plus five Democrats voting against. The vote came shortly after President Obama signaled his support for the bill, but it stalled in the House last year. And despite hopes from brick and mortar retailers like Walmart and Target, the House will not take up the bill during the remainder of this year’s lame duck session.
In other words, Speaker John Boehner (R-Ohio) is the only thing keeping you from having to pay taxes on online purchases from out-of-state retailers.
“The Speaker has made clear in the past he has significant concerns about the bill and it won’t move forward this year,” said a spokesman for Boehner on Monday, with the chief concern obviously being the introduction of a new tax, which Republicans — especially House Republicans — abhor on principle.
Those in favor of online sales taxes have cast the issue in terms of fairness. Indeed, the name of the bill is the Marketplace Fairness Act, which in the House was actually introduced by a Republican — Steve Womack. He just so happens to represents Arkansas’ third congressional district, which includes Bentonville, which just so happens to be the home of Walmart headquarters.
Were this bill to pass the House, Obama would almost certainly sign it into law (assuming it’s a clean bill). And while giving states the ability to tax out-of-state online retail purchases would raise billions in state revenue, it would mean taking more money out of the pockets of online shoppers. No doubt, there’s a discussion to be had about the trade-offs involved in implementing such a law. But with younger Americans overwhelmingly opposed to online sales taxes, it’s clear that for once, millennials are squarely on the side of Team Boehner.