Howorth: Sales Tax Inequity an 800-Pound Gorilla

On September 17, the Northeast Mississippi Daily Journal published a letter from Richard Howorth of Square Books in Oxford, Mississippi, calling for e-fairness. The letter was written in response to an Associated Press article published in the September 16 edition of the Journal that noted Mississippi is one of 10 states most reliant on sales taxes as a share of revenue.

“I felt it was a good and timely opportunity to draw attention to the e-fairness cause without it being merely about my own business,” Howorth told Bookselling This Week.

The Journal article noted that reliance on sales tax means these states are particularly “susceptible to an ever-widening income gap dragging down state tax revenues.” This inequality stunts overall economic growth, it said.

In his September 17 letter, Howorth wrote: “The article … fails to mention the 800-pound gorilla comfortably seated in the chambers of our legislature — Mississippi’s failure to address uncollected tax from online businesses, including even those who have nexus (a physical connection) in Mississippi. To date, 26 other states have dealt with this sales tax fairness issue.”

Howorth further pointed out that Mississippi loses more than $300 million annually in sales tax revenue, “money which in communities across the state goes to pay for schools, fire and police protection, and countless other needs. That revenue which the State does receive is collected by our state’s local businesses, and these Mississippi-based businesses, whose employees live and work here, struggle to compete with — if they have not already been ruined by — out-of-state firms who contribute nothing to the state and get a seven percent competitive advantage over mom-and-pops.”

While the Journal article failed to mention how e-fairness may help solve the issue of declining state tax revenues, Howorth stressed to BTW that it nonetheless “made a good point of how sales tax disproportionately affects the poor. It is obvious in the e-fairness battle that those who can afford to have computers and other technology which they employ to purchase goods tend to be wealthier and politically more powerful. Sales tax thus is made more regressive by those states that refuse to adopt online tax measures.”