The bipartisan lobbying effort has yielded fruit this year in the “Marketplace Fairness Act.” Under this bill, if you buy something online, you pay a sales tax. Retailers, meanwhile, will have to collect sales taxes for every state where they have customers, even if the retailer has no physical presence there.
This is often how tax legislation gets passed: powerful interests hire revolving-door lobbyists to push for taxes on their clients’ competitors. For over a decade, such online sales-tax bills have faltered in Congress, largely because they had a powerful opponent in Amazon.
But this year, Amazon switched teams, joining Walmart on the pro-tax side — not out of some newfound concern for “marketplace fairness,” but because Amazon’s business model is changing in such a way that now Amazon stands to benefit from this tax.
In order to provide faster shipping, Amazon is building warehouses throughout the country. These warehouses constitute a “physical presence,” which requires them to collect sales taxes, in any event. So, if Amazon is going to have to collect sales taxes under the existing “physical presence” doctrine, it may as well try to expand online sales taxes to whack its smaller competitors who don’t have a 50-state network of giant warehouses.
The rest of the online retail industry remains on the anti-tax side. NetChoice, a coalition including other online retailers like eBay and Overstock.com, is fighting the “Marketplace Fairness” bill.
These are the typical battle lines in Washington: big business for big government, and smaller business for smaller government. And the bigs typically win.
Government collects revenues it will squander; the bigger outfits crush the smaller outfits and limit competition, resulting in both higher prices to the consumer and a sales tax for the consumer to pay; the cost of goods increases, and so fewer people will be able to afford goods; and the only people who win are the people who write the laws, those they write the laws for, and the lobbyists who get paid to sell legislators on how to spin the laws as an instance of government morality.
And no silly court decision from 1992 is going to stand in the way of Fairness! For the Fairness!
Corporate socialism sure is awesome, da comrade?
I don’t know that this article is entirely accurate. I believe Amazon was originally against collecting taxes due to the bookkeeping nightmare of trying to keep track of the different taxes spread across all of the different States and municipalities.
Think online flat tax.
Also, Amazon has been known to mothball warehouses (Texas, for instance) when States decided to target Amazon)
Amazon ships worldwide. Talk about a bookkeeping nightmare.
I hope they realize that with higher pricing impulse buys will go away and I’ll only buy what I REALLY want or need? That means that Amazon will most probably die and Walmart will contract. If that’s what they want then fuck ’em. What’s next ordering with a cell-phone text from an online catalog and then using a wallet system and giftards to pay?
I believe Amazon was originally against collecting taxes due to the bookkeeping nightmare of trying to keep track of the different taxes spread across all of the different States and municipalities.
That’s the reason we got the moratorium on taxing Internet commerce in the first place. If all an online retailer has to do is collect a certain rate for each state, it’s a simple 57-line lookup table (unless you count converting to Austrian) based on the state field, perhaps cross-validated by the first 3 digits of the ZIP code. But when USPS creates “cities” like “Shawnee Mission, KS” to cover dozens of municipalities; school, fire, and water districts; it’s very difficult to know from the ZIP what rate to charge, much less to whom the money should go.
If you have to fill out those 57 tax returns every month, it’s bad enough, but if you have to do thousands of them to cover all the special taxation districts, it’s a nightmare.
If we are going to put this burden onto businesses, they should be able to file the report online using a single, simple format, and write ONE CHECK to their own state treasurer, who will then settle up with the other 56 states when they see who sold how much where.
My sister gave me a Mikey Moore video for my birthday. She’s kind of a giftard.
The most important thing, Paleo, is that you won’t be able to flee to a new start up that can’t afford big business warehouses all across the country.
The advantage of ordering online for the consumer was that without having to pay sales tax the cost was generally lower than the local brick and mortar store. Some online outfits also give you free shipping so that was an incentive too. The disadvantage was the delay in gratification, because you had to wait for the delivery.
Amazon probably switched sides because they wanted to be able to influence the final bill. Which means they know the tax is inevitable. The deal is done.
Who gets hurt, as has been mentioned, are the little guys who sell their products on Amazon and EBay because whatever advantage they had is soon gone.
You mention the ’92 Quill decision, Jeff; when I was looking around I found another relevant decision from ’67 as well.
I always thought of this as a new thing and it never occurred to me that people have been buying things from out of state for decades and decades through mail order catalogs.
Should be noted that I see the distinction between a state and federal law here but the underlying logic against remains. From my linked decision:
If this goes into effect, it’s not particularly hard to see Berkeley or San Francisco essentially banning the interstate importation of products they don’t like through outrageous taxes or compliance costs. We have a great example right now with Chick-fil-a showing exactly how these petty tyrants are willing to abuse power. And now we’re going to allow everyone’s local assholes to take their show national?
They can certainly try, but someone would have an excellent case under the original interstate commerce clause which was specifically meant to stick a cork in states trying to interfere with national commerce by imposing tariffs on out of state products.
What is really sinister is that (at least in Pennsylvania), the online consumer is already responsible for tracking his online purchases and paying the sales tax to the Commonwealth. I believe many states have a similar requirement. This bill would not necessarily make it more fair to B&M stores, because people are already supposed to be paying the tax – it would simply make Amazon’s and Walmart’s online competitors deal with the red tape in order to diminish the competition that they may be exerting upon the Amazons and Walmarts.
I’m sure everyone here is carefully tracking their online purchases and paying their local sales taxes.
Yup.
I think the way they’d get around it is to make the taxes equivalent for local establishments but it just so happens that they don’t have those local establishments because of their activist zoning.
Take something like this, reword it as a transactional sales tax, and see what Roberts has to say about it when challenged in court. Can’t say I’m positive it wouldn’t work.
It’s so much fun living in commie-land.
They are fucking us worse than Harry Reid with a boy’s choir.
In Michigan the “use tax” is levied on the income tax form and you can either track your out of State purchases, keep the receipts, and pay the 6% or just use their income based “use tax” table and add that amount to your income tax owed or subtract it from your refund. You can guess which gets done.
I’m betting that even if this passes and out-State retailers have to collect the sales tax the State will just leave the “use tax” in the income tax form so as to keep collecting a double dip into our wallets.
To me, the Marketplace Fairness Act is not about taxation without representation since the tax is ultimately due of the consumer in all instances. To me it’s about the government once again picking winners and losers by redefining the marketplace in an unnatural fashion. It’s the government taking the side of big business against small business and entrepreneurs. In short, it’s a killer for the economy. If you don’t believe that’s the case, then try answering the following questions.
If the large retailers are not backing the change for competitive reasons, why aren’t they supporting the easier origin based model advocated by Jim DeMint and others?
Why can’t the marketplace dictate who survives? Aren’t conservatives supposed to support that?
Why must the regional chains pay because the big box retailers won’t adapt and change their business model?
Why are “conservatives” in favor of forced collection of sales taxes by somebody other than the state benefiting? Weren’t we against that when the shoe was on the other foot and it was Wisconsin collecting dues on behalf of the unions? How is this different?
Is it really a big leap from sales tax collection to income tax obligations and business licenses in jurisdictions with no physical presence? At what point will it stop?
It’s time to end this nonsense and kill the Marketplace Fairness Act.
link
There will likely be a tax in the future on comments made on blogs as well. For the fairness.
The tax will only apply to conservative/classical liberal blogs. Supportive comments on progressive blogs will result in a tax credit.