Christian Bookseller Group Wants You to Pay Internet Sales Tax
CBA, the Association for Christian Retail, is supporting proposed federal legislation that would require Internet-only businesses to collect and remit sales or use taxes to the states where purchasers reside. Currently, sales tax is only payable when buyer and seller reside in the same state.
The change in the law supported by the CBA appears to run counter to the U.S. Constitution and Supreme Court decisions.
The action by the Association for Christian Retail comes as an increasing number of local Christian bookstores face bankruptcy due to competition from online companies like Amazon.com and ChristianBook.com.
The proposed Internet sales tax law is called the Main Street Fairness Act (H.R. 5660). It is questionable that a Republican-controlled House of Representatives will pass the Act because it seeks to bolster businesses of all kinds that cannot compete in a changing world, and that runs counter to free market ideals. Financially desperate state governments support the bill because it brings more money into their coffers.
Authorities note that the Due Process and Commerce clauses of the U.S. Constitution limit a state from imposing tax liability or collection responsibilities unless there is a “nexus,” and that has been historically defined as the buyer and seller being in the same state.
The Supreme Court backed this Constitutional view in 1967 with The National Bellas Hess, Inc. v. Illinois Department of Revenue decision, and again in 1977 with the Complete Auto Transit, Inc. v. Brady case. It wasn’t until 1992 that the Supreme Court ruled that Due Process was less of a factor in their Quill Corp. v. North Dakota decision. However, at the time, the Supreme Court did reaffirm that nexus must exist before states could charge sales tax. This affirmation of the Constitution is why there is no sales tax today on Internet purchases across state lines.
The new law advocated by the Association for Christian Retail would be a nascent National Sales Tax. Several countries currently have a National Sales Tax. For example, the Harmonized Sales Tax (HST) reaches 15% in some Canadian provinces, and in the European Union (EU), people pay a Value Added Tax (VAT) of 23% on purchases.
In the plan supported by the CBA, online business people would be forced to accept the economic burden of tracking customers and remitting taxes to each of the 50 state tax agencies, a cost that would not apply to local booksellers.
In a news release, the Association for Christian Retail said, “Giant corporations that use predatory practices that avoid sales taxes should be required to pay the same taxes locally owned businesses must pay.” This language seems rather misleading because corporations are not being predatory and are not avoiding taxes, but are simply operating under the rules set forth in the Constitution by our Founding Fathers in 1787, and which are still the law of the land today.
Some would maintain that it is not the U.S. Constitution that needs to be changed, but rather the business model used by bookstores. Christian book purchasers have turned in huge numbers to online booksellers because of the convenience, wide selection and low price not available in local Christian bookstores.
The malaise of local Christian bookselling may be partly historical in nature, and new tax schemes are unlikely to save them. Since the Great Depression (1929-1941), Christian booksellers have largely taken books from Christian publishers on consignment, and return what they don’t sell.
This practice comes at great expense to the environment in terms of fuel expended shipping books back and forth, and unsold books being dumped in landfills or pulped. Also, with consignment selling, there is no incentive for booksellers to use discounting or other standard marketing methods because it is so easy to return books to publishers for credit. Few Christian booksellers promote Christian books though ads, newspaper inserts, their own web sites, the cheap local television advertising that is now available, or in other media.
Often Christian bookstores do not have the staff to actually sell books to customers, and only have someone at the counter to accept payment if a customer finds something they like. Christian consumers like online sites because they are able to read reviews there which aid them in making their buying decision.
From its founding in 1950, CBA was the acronym for Christian Bookseller’s Association. The name was modified to “CBA, the Association for Christian Retail” as Christian bookstores began taking the emphasis off books and placing it on other retail products such as music, gifts, greeting cards, tee-shirts and novelty items. With the advent of music downloads and eBooks, Christian bookstores may one day have to rely exclusively on sales of gift items to keep their doors open, regardless of sales tax policies.