Congressional action could aid state's budget down the road

As Washington state legislators prepare for a special session to deal with a billion-dollar-plus budget deficit, they could get an eventual assist from Washington, D.C. A giant assist. Federal lawmakers are considering a bill that effectively could cut this state's deficit by almost 20 percent down the road. It's a bill that would help local retail businesses, would clarify confusing rules and -- get this -- has bipartisan support.

While it sounds too good to be true, it isn't. What is true is that this is good legislation that warrants quick congressional passage, though that outcome is far from assured.

The bill is called the Marketplace Fairness Act. For qualifying states -- and Washington is one -- it would require out-of-state companies that sell more than $500,000 annually to collect taxes on sales to customers in those states. Washington qualified in 2008 when the Legislature adopted the Streamlined Sales and Use Tax Agreement. The state could start collecting the taxes 90 days after the bill is signed into law.

What set this up was a 1992 U.S. Supreme Court decision. The court ruled a state could not require online and mail-order businesses to pay taxes on sales to customers in that state unless the companies have a presence in said state. This setup has led to controversy about what constitutes a company's physical presence, especially for Seattle-based Amazon.com, which vigorously has fought taxation efforts by other states. The Washington State Department of Revenue estimates this state collects tax on only about half of online and mail-order sales.

This has a double effect, especially in a high sales-tax state like Washington. The online or mail-order outfit gets a competitive price advantage over local stores, which hurts the livelihoods of local store owners and employees. If one business pays a tax, a competing one should, too. Plus, local governments are denied revenue they need to provide services.

The money would be substantial: The Washington State Department of Revenue estimates that the act would generate $306.5 million for the state general fund during the 2013-15 biennium and another $176.5 million for local governments. The bill has found bipartisan sponsorship in the Senate through Republicans Mike Enzi of Wyoming and Lamar Alexander of Tennessee, along with Democrat Dick Durbin of Illinois.

Amazon.com is on board with this measure, thanks to a sweetener that lets it charge a fee to handle sales-tax collections for merchants that sell products through its website. Traditional brick-and-mortar concerns that support the measure include Wal-Mart Stores Inc., J.C. Penney Co. and the National Retail Federation. The betting line in Olympia is that the measure won't pass, according to Marty Brown, Gov. Chris Gregoire's budget director. Let's hope he is wrong.

The House Judiciary Committee has scheduled a hearing for Wednesday. The Marketplace Fairness Act is one bill well worth watching -- and approving.

* Members of the Yakima Herald-Republic editorial board are Sharon J. Prill, Bob Crider, Frank Purdy and Karen Troianello.