Despite bipartisan passage in the Senate and added political sweeteners to entice more support in the House, the Marketplace Fairness Act, which would require e-retailers to collect state sales taxes, went nowhere in Congress this year.
The bill was widely seen as a victim of anti-tax sentiment in the House, which will only likely grow stronger in the new Congress that convenes in January.
But retailers now have a new bone to pick in the form of retail giant Alibaba, which is poised to disrupt online retail and doesn’t collect state sales taxes.
Another e-retail giant, Amazon, has notably switched sides in this fight, in part because its growing network of fulfillment and sorting hubs gives it a presence that requires it to collect sales taxes in an increasing number of states. But Alibaba, which is poised to disrupt American retail, is taking a stance more along the lines of the Amazon of old: it’s doing nothing illegal by not collecting the taxes.
Retailers have long protested the advantage this gives to their online-only competitors, but Congress has yet to budge. This new argument could actually win over even the staunch tax foes in the House, and would likely please governors of every political stripe. After all, states lose oodles of money because of the difficulties they have collecting sales taxes without the help of retailers.