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A recent study was released regarding the economic impact of closing the online sales tax loophole. The author of the study, Art Laffer, was quoted, “reinvigorating the U.S. economy should be the top priority for federal and state leaders.”

I couldn’t agree more. Job creation is vitally important to me and the citizens of Wisconsin and it should be for all elected officials. In his study, Laffer, an economic adviser to President Ronald Reagan, argues that closing the online sales tax loophole could be a big boost to our economy. I hope Congress is listening.

Here’s the background. Under current tax rules, out-of-state, online retailers are allowed to skip out on collecting sales tax on purchases made through their websites. On the other hand, local businesses have no choice but to charge and collect sales tax — automatically putting Main Street retailers at a 5 percent price disadvantage simply because they happen to have a store in our state.

The current system of government picking winners and losers in the marketplace has created a disincentive for small businesses to invest in communities, hire workers and grow our economy.

The good news is that Congress is considering e-fairness legislation, known as the Marketplace Fairness Act, which would close the online sales tax loophole and level the playing field for all businesses. The bill has broad, bipartisan support in Washington and has already passed the U.S. Senate by a wide margin.

But here’s the best news of all: In putting together the tax reform plan included in the recently passed state budget, my colleagues and I included a provision that would require any increased sales tax revenue the state receives from passage of e-fairness legislation to be used to lower income tax rates.

This all leads back to the Laffer study. Laffer’s research shows that if Congress closes the online sales tax loophole and Wisconsin uses the additional sales tax revenue to cut income taxes — as the state budget provision requires — our state will see over 23,000 new jobs and an additional $7.6 billion pumped into our economy.

Those of us who are old enough to remember know that this formula —eliminating loopholes, broadening the base and lowering tax rates — is the same philosophy Laffer advised Reagan to follow in the 1980s, which led to one of the longest periods of economic growth our country has ever seen.

In Madison, we are taking proactive steps to encourage job growth and business expansion. I will be sure to contact my congressman to emphasize that Wisconsin is ready for e-fairness legislation to pass so we can cut taxes further in Wisconsin.

Nygren, of Marinette, represents Wisconsin’s 89th Assembly District and is co-chairman of the Joint Committee on Finance.


Letters editor for Wisconsin State Journal