Heh, I always thought the exact opposite. 
Me, too. You spend more, you pay more taxes. You buy a more expensive car, you pay more expensive taxes. Seems fair.
Likewise in Illinois. I have to go back through my credit card statements and figure out which online purchases were taxable goods (as opposed to services) on which no sales tax was collected (mostly from Amazon).
It’s a huge pain in the ass, and it makes it harder than ever to get state withholding right. Given that I’m paying anyway, I’d damn sure rather have Amazon collect the tax for me.
How the hell is an online retailer supposed to process and keep track of the thousands of sales tax districts in the US? Most don’t have an army of accountants and software designers like Amazon does.
No sales tax offsets the cost of shipping.
Why would I pay more for an item online? It will cost more online than local if I’m paying sales tax and shipping.
F*ck that.
That’s a good question.
It was always an even bigger pain to pay the Use tax here in TN; since we have no income taxes most people never even fill out a state income tax form.
I’d be interested to find out how much Walmart and Best Buy contribute to Sen. Enzi’s campaign coffers.
You subscribe to a service.
If you are doing your sales through Amazon or Ebay or something like that, they’ll provide it for you.
And companies like Wal-Mart and Target and Best Buy have been collecting sales tax all along because they had nexus in pretty much every state.
As to taxes being offset by shipping - perhaps, but what wasn’t being offset by no taxes was the costs incurred in brick and mortar retail. Electricity and heat, rent, plowing the parking lot, cashiers, someone who doesn’t know how to sell a computer, inventory carrying costs. Brick and mortar were definitely at a disadvantage - and internet retailer has a lot less overhead.
The problems you described has had known solutions for years. How do you think catalogs survive?
I would totally pay more online for the convenience and I’m guessing a significant number of people would too
On the other hand, this may drive a small but significant direction of sales towards local companies. However, in a lot of places, shipping+taxes is often still less than the gas+time to go pick up the thing, if it’s even available. And most people aren’t buying groceries online, anyway, it’s for truly competitive shopping or for something simply unavailable where you live. And that covers a lot.
eBay just spammed me to urge my Congresscritter to oppose this.
I wrote back “Dear eBay. Go fuck yourself.”
It’s not only tax districts it’s knowing what every state taxes. Food items in most states are not taxed at a grocery store. This includes candy at least in some states. So should that candy I order on line to be sent to someone be taxed or not?
Some states tax clothes; some do not. Some just exempt children’s clothes. Some tax clothes, but have no-tax holidays for back-to-school shopping in August. I suspect this is going to be pretty difficult to do correctly and keep right.
Personally, I hate it when the federal government passes laws that allow for increased collection of taxes by anybody. They all take quite enough already. However, I’m for helping most local businesses, if that’s what they really are. Is there any real evidence that this law will benefit anyone other than the local Wal-Mart?
I have mixed feelings on this. I think historically it’s been good for everyone (except brick & mortar business owners) that we did not require online merchants without physical presence in a tax district to collect sales tax. It helped drive more people to online shopping which helped an emerging industry compete against an entrenched industry. Since it has generally had a downward pressure on prices everywhere, this is a good thing. While still overpriced by most standards, stores like Best Buy and Barnes & Noble have indeed slashed brick and mortar prices to try and remain competitive with online retailers.
That being said, it’s a lot of money now, and it creates a lot of state and local fiscal nightmares to have this ever larger piece of the retailing pie go untaxed. It is also now to the point that by and large online shopping doesn’t need the subsidization as it’s firmly established.
That being said, this is going to have some negative impact. There are not just fifty state tax districts, but something like 9600 tax districts. This makes it very complicated to determine on your own what tax should be collected on a sale and where it should be sent. It can be very complicated, imagine such a scenario:
State sales tax is 5%, but groceries, prescription medication, and children’s clothes are exempt.
County sales tax is 1.0%, but only groceries are exempt.
City sales tax is 0.5%, with groceries exempt but there is a 2.5% extra tax on alcoholic beverages.
So then your customer living in these three overlapping tax districts orders a combination order that includes wine and packaged food. Have fun.
So what’s the answer? Well, basically there are software services that suck in all the various rules and calculations and let you pay a fee to integrate this service with your payment gateway. So the software service does all of the calculation for you, but it does cut into your profit because you have to pay for the service. Unless you’re a vast enterprise and have the infrastructure to create your own system you’re basically stuck having to pay a third party a fee for every item you sell.
Interestingly for many, many years the most prominent internet retailer, Amazon.com, vigorously opposed any efforts to make it collect sales tax. When a State would pass laws directed at businesses that have physical presence in their borders Amazon would do almost anything in its power to avoid having to collect sales tax. It would shut down corporate satellite offices, customer service centers, it would end its affiliate program in that state etc. Amazon also lobbied heavily in Washington and in State government to fight any legislation along these lines.
But Amazon is no longer opposed, in fact it strongly supports this Senate legislation. What happened?
Well, remember the software service I mentioned that you can use to do all your tax calculations for you? Amazon created one, the most popular and widely used by far, and thus will make far more money off of its software service than it’ll lose in any lose revenue from the small number of customers who will be more likely to shop offline because of the sales tax issue. This means that Amazon is now very strongly positioned over any upstart online retailers because it basically gets a small cut of every cent they make. It also means (if you’re prone to believe this sort of thing) they could easily track sales volume of upstarts and other data, and use this information to chart acquisition strategies and etc.
It’s also very unlikely in most products Amazon does major revenue in that brick and mortar will ever beat Amazon on price. If you ad 5-7% to my average order from Amazon it is still sometimes 20% cheaper than anything around my house. Books for example are ridiculous, I’ve seen a book for $45 in B&N that is literally $20 at Amazon. The cost of maintaining hundreds to sometimes thousands of physical stores, and staff them, is simply far vaster than the very low shipping rates Amazon has been able to acquire because of how large volume their business is.
Who this really hurts is smaller online retailers, who typically cannot offer shipping at anywhere near a price as low as Amazon, and who will have to pay Amazon to do their complicated tax calculations.
Exactly. And those who say brick and mortar stores have a much higher overhead than online retailers don’t know what they are talking about. They have nearly the same infrastructure, employee, rent, and utility costs as physical stores do and their marketing costs are far higher.
You don’t think increased tax revenues will help with deficit spending or national debt?
Thanks, Martin_Hyde, for all that info. That’s a lot more than I’ve learned through any news source, for sure.
I love this place 
Isn’t this money going to the states? I’m all for decreasing the national debt and/or unecessary deficit spending. I’m just expressing doubt that it will be used for those purposes.
I kind of do, actually, my husband helps run a top ten ecommerce site for a company that has a ecommerce arm. And if you look at my location - its either Target or Best Buy
Generally no, online retailers do not have the same rent or employee costs. In general employees of online retailers make more money but there are far fewer employees. A distribution center for an online retailer does not need nearly as many employees per square foot as a retail space. Further, distribution centers are steadily getting more and more automated, with robots automatically moving goods around a warehouse as necessary. Retail stores may have cut back on some staff with self check out but not all that many, and due to safety/image concerns you won’t replace human stockers in a retail space anytime soon just because it’d be dangerous to have customers around heavy warehouse equipment.
Further, to sell stuff in a store the store needs to be located appropriately to reach its customers. That means retail stores can only be so picky, some operate in extremely high property value areas and thus pay very high rents. Much of an online retailer’s distribution locations can actually minimize rents by locating away from built up areas or at least in industrial parks not inside extremely high property value districts. Yes, distribution centers can’t just be placed anywhere, but there is substantially more flexibility than with retail space.
Finally, all the distribution chain Amazon has WalMart does as well except WalMart also has to staff and operate all of its retail stores.