Online retail continues to grow while local communities struggle with deep economic problems. Do these two economic trajectories have anything to do with one other? While there may not be a causal link between the two trends, it's time for online-only retailers to do the right thing: Charge and pay local sales tax.
Put very simply, the convoluted online tax system works like this: If a retailer maintains physical commercial space in a state, people who buy from its online domain are required to pay sales tax on their purchases. This is why individuals pay sales tax when shopping online from websites like Walmart or Costco.
If an online retailer does not maintain a physical presence, it does not charge and don't pay sales tax. This is why individuals don't pay sales tax when you purchasing on websites like Amazon or MacMall.
In the current system, local communities subsidize online-only retailers at the expense of bricks and mortar stores - you know, the retailers that provide jobs to the people in your community. Even more distressing, these subsidies come from local tax coffers.
It's time to change the system: All online retailers must be made to pay and charge a sales tax to help local communities.
The choice is ours, really, as consumers. What do we support more? Roads, schools and police in our cities and towns? Or 4-6% off our consumer purchases?
We may think that we're saving by embracing the rapidly growing realm of e-commerce, but in reality, we end up paying in an unacknowledged capacity - either through property taxes or increased sales tax, which hits our local retailers even harder.
Here are a few things to think about:
Online retailers don't need our help and don't need to be subsidized. They already offer more choice, greater convenience and more competitive pricing than brick and mortar stores. Our communities need our help. The question is whether lawmakers have the guts to legislate this much-needed change. I doubt they do. Maybe concerned local citizens should band together and publicly target and shame the sites that don't support their communities through local sales tax.
The difference between one online retailer and another is pretty slim. If the choice is between supporting my local police force and supporting some unknown corporate wonk, the choice is easy, if somewhat blunt.
And if you really don't want to pay sales tax, there's always New Hampshire, where you can basically live free or die.
Come on, online retailers. It's time to do the right thing. Pay up.
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Sorry, I'm pretty sure they're much smarter than that. Asking e-tailers to apply sales tax rules is not an overly onerous task.
Not really,
It's the sales tax rates in the 45 states that are convoluted. Quick: what's the sales tax on a book in California?
According to this: http://www.business.gov/business-law/online-business/sales-tax/ there are over 7500 tax jurisdictions.
Wonder how ofter there are changes in those jurisdictions?
And frankly, if you're concerned about Amazon not collecting your state's sales tax for you, you are almost certainly legally required to pay it yourself to your state.
VCR is obsolete, so will be CD's someday soon.
similar is the fate of newspapers one of these days. why should Brick and mortar stores be spared.
I love online shopping. Too bad there is no convenient way to shop groceries online :). Other than groceries, clothes (that I need to wear before purchase to see if it fits), shoes etc I shop everything online at Amazon. since 1999 !!
jcaunter: A couple of things. We're finding here in VT that trying to solve everything through property taxes isn't a good solution either. While I hear you about the fairness issue, property taxes sometimes hit people hard who've lived in the same place a long time without an increase in income.
For you and MikeTN: Even if you're small, you still have to collect sales tax online in the state you do business. Right now, places like Costco or Walmart (or Apple) have a disadvantage against Amazon, that has no stores. So why should my tax dollars subsidize Amazon, but not Costco. That makes no sense at all.
As for the small business angle, if sales tax makes or breaks your online business, you're probably need to do a better job running it. Sad but true.
State aren't going to stop spending money because we citizens expect and demand the services they provide. That's the big canard in the tax debate.
It's one thing to budget responsibly, it's another to give certain online retailers tax advantages because they don't do business in your state, over online retailers that do.
2. Property owners disproportionately benefit from infrastructure improvements; I see no problem with them disproportionately paying for those improvements too.
3. Here in Tampa, a sales tax (of over 7% in total currently), was voted in to buy a sports palace for a billionaire. Again, I say 'bravo' for anyone smart enough to avoid contributing to the payoff of that fiasco. The next time a billionaire needs a sports palace, let's see what happens when the local government tries to raise property taxes for that purpose.
4. Online retailers certainly have no reason to voluntarily collect sales taxes; in all likelihood they'd be sued by their stock holders if they tried. Also, there seems to be something in the constitution about the legality of states regulating inter-state commerce. Any laws regarding this are sure to end up in the Supreme Court with no guarantees of victory for anyone.
5. Brick and mortar retailers will go out of business? So what? If distribution can be done better online, let's do it online. All those people previously employed at inefficient retailers will now be available for productive work instead of make-work.
Everything else aside, sales taxes shift the burden of supporting society from the rich to the poor. When sales taxes are abolished, America will be a fairer country.
Here is a novel idea, what about having the states stop spending more then they take in. Have them stop paying hundred thousand Dollar plus salaries to people who sit on their buts waiting for a sweet retirement package at 50.
As a small online retailer I hear almost evey day someone in government saying that small businesses create the jobs in our country. So do the right thing and stay out of our business