On Capitol Hill

Legislative Priorities

• Protecting the Teacher Tax Deduction for teacher purchases of classroom materials.
• Leveling the playing field for retail stores to compete with Internet-only mass marketers. (See below.)
• Eliminating potential barriers to teacher choice in supplemental products or other negative consequences in the language used in the reauthorization of ESEA.

Legislative Scope

NSSEA is interested in influencing pro-small business and pro-education legislation/regulatory policy that does the following:

• Encourages innovation and teacher choice in educational materials;
• Increases funding for educational products;
• Reduces interference with our members' ability to provide their products;
• Discourages threats to the dealer channel;
• Has overall positive commercial impact on our members.

Find Your Elected Official

Leveling the Playing Field for Brick and Mortar Retailers
Report by Jim McGarry, NSSEA President/CEO

One of the policy issues that NSSEA is keeping a close eye on is the Marketplace Fairness Act. As you may know, this bipartisan act, would give states —who have simplified their sales tax laws — the authority to collect sales tax from online and catalog retailers at the time of sale, just as traditional 'brick and mortar' stores already do.

The way that the Internet Sales Tax issue is currently being handled gives a price advantage to Internet retailers over brink and mortar resellers and deprives state and local governments of needed resources. In the 1992 'Quill vs. North Dakota Supreme Court case, it was ruled that retailers could not be forced to collect sales tax on out-of-state shoppers unless they had shops in those states because each jurisdiction, about 7,500 of them, has its own tax rules, making it simply impossible for online retailers to maneuver through each state's complex tax system. For many of our members, this would be a waste of money, valuable administration time and a heavy tax burden. Technology has eliminated this burden.

Since the Supreme Court ruling in the 90s, Internet retailers have been exempt from collecting local and state sales taxes during transitions because the rules were very complex and placed an extra burden on interstate commerce. This has resulted in states losing critical revenue, especially in a business climate that is rapidly moving online. The largest revenue sources for state and local governments are income taxes, property taxes and sales taxes. The nonpartisan Tax Foundation estimates that nationwide, sales tax account for 34.4 percent of state and local revenue. In result, state and local governments are losing millions of dollars every year. The Center on Budget and Policy estimate 30 states will have financial shortfalls of nearly $50 million next year. Many of these resources go to education. In 2013, states project to educate 350,000 more K-12 students and 1.7 million more public college students in the upcoming school year than they did five years ago.

Secondly, passing the Marketplace Fairness Act would give all retailers a fair playing field. While many of you have migrated online or are strictly Internet-based, most of our member dealers are still brick and mortar. This act would ensure Internet retailers collect the same amount of taxes on transactions that you do, therefore not giving them an inherent price advantage. This will help eliminate the trend of stores becoming showrooms where customers investigate product then just go online and have it shipped to them without paying the sales tax. It will not create a new tax burden, but require states to simplify their sales tax laws to make it easier for online businesses to comply. Under this proposed law, online sellers that make less than $500,000 in remote annual sales (meaning receiving taxes from customers where the retailer does not have a physical address) would be exempt from collection requirements. This means larger companies such as Amazon would be required to pay while many of our smaller dealers would be excluded.

NSSEA has joined with over 250 associations and companies in the Marketplace Fairness Act Coalition which is being managed by the International Council of Shopping Centers. See the list of these organizations. We will be attending bi-weekly meetings to make sure that NSSEA members are represented in the discussion and ready to act with their elected officials when the time is right. NSSEA's position is clear on this issue. While we do not want our members to incur more taxes, this act would allow states and local governments to collect existing money that is already owed to them under the current law and level the playing field eliminating the price advantage of on-line retailers. We believe that by simplifying the Internet Sales tax system, online retailers would have a fair way of collecting sales tax transactions while ensuring that critical services, such as education, are not jeopardized in the future. Visit www.marketplacefairness.org to learn more about this act.