Cyber Monday traces its roots to a time when Americans patiently labored with painfully slow dial-up service at home but enjoyed faster broadband access in the office. To avoid staring at an hourglass or a spinning wheel, consumers waited until the Monday after Thanksgiving to make online purchases on the faster office network.
Technology certainly changed. Now, a grade-school student enjoys a level of high-speed internet access and handheld computing power that was undreamed of even a decade ago. What hasn’t kept up with technology is tax policy, which moves at dial-up speeds, at least in the Show-Me State.
Earlier this year, Missouri lawmakers failed to pass legislation to tax online sales, despite backing from Gov. Mike Parson. This lack of action means our state loses out on a share of $9.4 billion in online sales expected nationwide on Cyber Monday. That’s nearly $2 billion more than the projection for Black Friday, when shoppers hit the malls and big-box stores.
Missouri is one of two states without an “economic nexus” law that requires a seller to collect and remit a tax if its overall sales exceed a certain threshold, regardless of whether the business has a physical presence in that state. The Supreme Court’s decision on South Dakota v. Wayfair allows states to collect this sales tax from remote sellers.
In addition, Missouri is one of 12 states that fail to require large online marketplaces like Etsy, eBay and the Amazon Marketplace to collect and remit sales tax on behalf of sellers using those platforms.
Lawmakers are traditionally cool to new taxes, but inaction in the face of changing consumer preferences marks a missed opportunity. In Missouri, lawmakers should appreciate that online sales tax revenue benefits local communities more than state bureaucrats. It also addresses a comparative disadvantage that mom-and-pop stores face as a growing portion of retail commerce shifts to online sales.
Moreover, the speed of new legislation in the wake of the Wayfair ruling — some coming from states that share Missouri’s loathing of new taxes — serves as a rebuke to the notion that online taxation would be cumbersome and difficult to enact.
Cyber Monday might be a gimmick, but it’s one that Americans embrace in large numbers. This is something lawmakers should consider when next year’s legislation session begins. Otherwise, the state plays the role of stubborn outlier, just as in prescription drug monitoring.
For those who still have a slow online connection, maybe their computer should display an outline of the state of Missouri instead of one of those spinning wheels. That’s what a lack of progress looks like.