Sales Tax Fairness

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Issue

The businesses that line the streets of our nation’s small and rural towns provide essential goods and services to the farmers and ranchers who work the fields that surround them. But home-town businesses are at a disadvantage when they compete with online-only retailers that don’t have to collect sales taxes. When this disadvantage causes a “main street” business to close or scale back, the impact is especially hurtful to already struggling rural towns. 

In addition to placing local merchants at a disadvantage, the disparity deprives state and local governments of the tax revenue they need to provide essential services. Since local governments and schools rely heavily on property taxes for funding, when sales tax revenues decline they often turn to property taxes to make up the difference. For land based-businesses like farming and ranching, this is particularly onerous. 

South Dakota v. Wayfair

The Supreme Court’s ruling that states have the authority to require retailers to collect and remit sales taxes on remote internet sales is a victory for Main Street retailers and local stores, according to the American Farm Bureau Federation. The ruling in South Dakota v. Wayfair overturns a 1992 precedent that only allowed a state to mandate the collection of sales taxes from online merchants that maintained a facility inside the state’s borders. AFBF and South Dakota Farm Bureau together filed an amicus brief in support of South Dakota.

“When a family-owned grocery, drugstore, or gift shop is forced to shutter its doors after generations of serving a town’s citizens, it does not merely represent the loss of one business. It also often means another empty store-front in an already struggling downtown, the loss of jobs (including off-farm jobs of family farmers and their spouses), and less foot traffic for the neighboring shops. It also inevitably means less revenue for critical public services, such as emergency responders, law enforcement, and educators,” AFBF and SDFB said in their amicus brief.

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