Because if Internet companies like Amazon aren't forced to collect sales taxes, then Main Street companies will go out of business which will wipe out the support for your local Little League team! Honest!
Um …
Okay, it's a complicated equation. Lack of sales tax payment does provide Internet vendors an advantage … except that, by the same token, said vendors (where they don't have a physical presence in a state) don't actually significantly draw on state and local resources. And, yeah, everyone wants to support "Main Street" shops, but the big boxes that are pushing this new tax law — Wal-Mart, Target, Home Depot, etc. — are not what most folks consider "Main Street" shops (cf. "mom and pop stores" and "family farms").
Plus, of course, state (let alone county and city and parish and special district) sales tax jurisdictions and laws are a mare's nest of complexity.
Ultimately, I suspect we'll see this sort of a law go through, if for no other reason than that states are desperate for revenue, and charging everyone a sales tax bump is a lot more politically palatable ("Think of the Little Leaguers!") than raising state property or income taxes. #ddtb
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Politicians, retailers push for new Internet sales taxes
The halcyon days of tax-free Internet shopping may soon be over, if Congress approves a proposed federal law supported by Wal-Mart and other big-box stores. Read this blog post by Declan McCullagh on …
I’m confused. I live in NY State and already pay sales tax on Amazon purchases. I guess I’m really behind on things, because I thought everyone did.
Amazon has traditionally only been required to charge/collect sales tax in states where they have a physical presence (I don’t know if Amazon has offices or distribution centers in NY). They have also, over the last year or so, begun cutting some deals with states that really, truly press the matter.
“don’t actually significantly draw on state and local resources”
So what? Are you suggesting that tax should be linked to resource used. A company that makes a $10m profit from a factory that employs 200 people should pay more tax than a company which is 2 blokes making the same profit from playing the stock market from their basement?
Last year Amazon paid no UK tax, despite a £35m profit in the UK, because they route it all through Luxembourg.
You want to trade in a country? Then you pay tax on the profits you make from the country. It’s called being a human being.
@Hussar – In part it depends on what the purpose of the tax is. To the extent that a sales tax is in support of local or state services to the company in question, then lack of an employee or physical presence reduces the justification for them.
Arguably, those services are also more directly supported by property taxes, which Amazon obviously doesn’t pay (and which the factory above would indeed pay more of than the basement blokes). (The basement blokes would also probably not be paying sales tax, but would be, like the factory, paying income tax.)
I’m not arguing that Amazon (et al.) should not be paying any tax. The question is, what kind of tax, and to whom.