Economist says sales tax fairness could help create 1.5 million jobs

A prominent conservative economist said this week that the nation could add 1.5 million jobs over the next decade if Congress passes legislation allowing states to require online sellers to collect sales tax and the states then use the new revenue to lower other taxes.

“The impact of collecting Internet and remote sales taxes and using additional revenues wisely would be profound,” Arthur Laffer wrote in an op-ed in USA Today. “But in order to capitalize on this opportunity, Congress must first pass legislation allowing states to act.”

The editorial was published on Thursday, the same day Laffer released a 37-page study that found passage of the Marketplace Fairness Act could lead to a $563 billion increase in gross domestic product and 1.5 million new jobs by 2022.

The forecast hinges on states using the additional revenue that would be brought in to reduce income taxes or other tax burdens, as promised recently by the governors of Ohio, Wisconsin and Iowa. The lack of online sales tax collection cost states more than $23 billion in 2012, according to Laffer.

Laffer was a member of former President Reagan\'s Economic Policy Advisory Board during the 1980s.

Under a 1992 U.S. Supreme Court ruling, online sellers are currently required to collect sales tax only in states where they have a physical presence such as their headquarters, an office, store or warehouse. The Marketplace Fairness Act, which passed the Senate in May and is awaiting action in the House, would allow states to require sales tax collection regardless of physical presence.