If Congress enacts the Marketplace Fairness Act (such as S. 743) to allow states to require some remote (non-present) vendors to collect sales tax from customers in their state, states should see a revenue increase. The revenue is not a new tax because their residents should have been paying use tax on these purchases from remote vendors, but because individuals and businesses are not 100% use tax compliant, the sales tax from remote vendors would likely be greater than use tax collections. At least one state has given consideration to what to do with the revenue.
By The Way – the House Judiciary Committee held a hearing today (March 12) on alternatives to the MFA – I’ll have more on that later. Read more