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Support grows for online sales tax
Giant e-commerce retailer Amazon now backs Congressional legislation to tax online transactions.
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Kai Ryssdal: If you're in California and you buy, say, a tent online from an out-of-state e-retailer, you don't pay sales tax. Handy for the consumers among us.
States, though, say they're losing $23 billion a year in unpaid taxes on transactions like that. Government deficits being what they are, it's no surprise there's bi-partisan support in Congress to make online retailers collect state and local sales taxes. The kicker here is that Amazon's one of the companies in favor.
Marketplace's Queena Kim has more on what could be a new chapter in e-commerce.
Queena Kim: Once upon a time in e-commerce -- like a decade ago -- online retailers like Amazon said collecting state and local sales taxes could kill their young industry. It was one of their only competitive advantages over brick-and-mortar stores.
Well fast-forward to 2012 and that argument -- it’s over.
Steve DelBianco: I’m sorry I don’t buy it at all!
That’s Steve DelBianco, executive director of NetChoice, a trade group that represents e-commerce companies like Ebay and Overstock.com.
DelBianco: There’s no evidence that consumers actively use e-commerce because they want to avoid sales tax.
Many big e-retailers are already collecting taxes and that hasn’t hurt sales. Turns out online shoppers are more affluent.
Gene Alvarez: In order to be an Amazon customer, it’s starts with having Internet connection, having a machine.
That’s Gene Alvarez, an analyst at Gartner. By “machine” he means a computer and he also says you generally need a credit card, an office or somewhere where it’s safe to leave packages. So e-commerce shoppers don’t mind spending a few extra bucks on sales tax. What they do mind? Waiting.
Alvarez: The competition is shifting from 'you won’t pay tax' to 'how quickly we can get a product into a consumer’s hands?'
To do that, big e-retailers need to be closer to customers. Amazon has a distribution center in more than a dozen states. And in each of those states, it’ll eventually have to start collecting sales tax. So now, their competitive edge depends on making sure all the other e-retailers collect taxes too.
In San Francisco, I’m Queena Kim for Marketplace.
Ryssdal: Retail sales, of course, are down, and we've been asking you on Twitter: What you're spending money on if you're not shopping? Shawn Connell tweeted us: "Using it to offset the rise in grocery prices, mostly."
Tweet us at @MarketplaceAPM.
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I heard part of this story a couple of weeks ago and I was thrilled to learn that Amazon might start collecting state sales tax--because I've been avoiding them because they don't. I went back to learn the full story today to inform an on-line buying choice, and reading the comments I couldn't believe that no one else was applauding this!
"Our local Best Buy couldn't compete." And neither will your kids as they try to get into college or enter the working world because of the cuts to school budgets that leave them unprepared, and eventually unable to buy anything, on-line or otherwise.
"i see no reason to pay sales tax to california for interstate commerce... use some common sense, common to a 7 year old." Ditto. Or, "ditto."
"...take a small business and ask them to track and pay taxes across the country and it will be crippling." Would you prefer to put our your own fire?
We must all take a look at how we have been complicit in the gutting of state funds for schools, firemen, police, safe water, sewage systems, roads (the same roads on which all of those on-line purchases are delivered), etc., other states as well as our own, "loving our neighbor as ourselves," to paraphrase one of the golden rules. Taxes collected at the source of sales will level the buying playing field, keeping stores open in our neighborhoods to preserve the ability to see an actual item so you can comparison shop. And yes, I do pay the sales tax on the state forms that have been set up to try to address this, but it would be way easier to just pay as I go.
If state sales tax were collected across the boards, it would level the playing field for small business, too, so that you wouldn't have to compete with others who are thumbing the state laws as well. You would be making sure that the states you do business with have money moving around them, creating more people there to purchase your goods. Amazingly, teachers, firemen, policeman, and utility workers all buy stuff too! We want more of them, not fewer, to able to do so, not to mention preserve and expand the education, health, and safety they provide to our communities along the way.
Here's an entrepreneurial idea: someone devise a cheap app for businesses for collecting the sales tax data and making it easy to pay each state. If someone doesn't, see the formation of tax-tracking jobs as a boost to the economy. There are a lot of unemployed teachers who could apply.
It has gotten a bit convoluted. But not taking sales tax into account is just silly. If you find an online vendor who is affordable and can avoid the sales tax, it may be worthwhile - assuming "shipping & handling" doesn't offset the difference.
Not that I want to pay more anywhere, but this would be an ideal place for Congress to regulate "interstate commerce" with a flat rate for all transactions. But that's assuming they were capable of agreeing on anything.
Happy to pay sales tax for online purchases? Not in my world. Especially for big ticket items. Earlier this year we shopped for a large flat screen TV. Free shipping and no sales tax made Amazon the best value. Our local Best Buy couldn't compete.
"DelBianco: There’s no evidence that consumers actively use e-commerce because they want to avoid sales tax."
I do not know where this research came from but I ALWAYS shop around to find a site that I do not have to pay sales tax. That was the beauty of internet shopping, If I can save money I am going too. Before Amazon started to collect sales tax for NY I almost exclusively used them but now I shop around more and use sites like Newegg or Tigerdirect when I can. On large purchases that sales tax add up and I give NY enough of my money in taxes as it is.
I shop local for many things but for electronics you can not beat online retailers. Hold the sales tax please..
Hey Xray39 - It's a short piece so couldn't get too into the weeds. Yes, there is an exception with really big ticket items but then that's often offset by shipping costs so... But I think his broader point was that most big online e-retailers now regularly beat brick-and-mortars in price even when you add in sales tax, it's often a wash or sometimes still beats the brick and mortars and so doesn't sway decisions too much
Hey Xray39 - It's a short piece so couldn't get too into the weeds. Yes, there is an exception with really big ticket items but then that's often offset by shipping costs so... But I think his broader point was that most big online e-retailers now regularly beat brick-and-mortars in price even when you add in sales tax, it's often a wash or sometimes still beats the brick and mortars and so doesn't sway decisions too much
Agree with Shampooman. In my home state, there is a (potentially) different tax rate for each county and I must report it separately. Also the laws as to what is taxable and what is not are confusing and complicated. The state tax guide even says the laws are varied and complicated and if you have any questions, call. Multiply this by 50 states and you can see the mess it creates for small businesses, or even large businesses, even though they have more money to throw at this problem.
A few extra details... Amazon didn't use to be in favor of this. In fact they have pulled out of paying a percentage of sales to those that put up Amazon affiliated websites in many States because those States said they then had Nexus and that Amazon would have to collect sales tax in their State. The reason they have changed isn't because all of a sudden they think it's a good idea.. It's because they, as the Grandaddy of all internet businesses have figured out that they can provide a "service" to all the smaller internet retailers and charge a fee. They will keep track of the sales tax for small businesses and they'll make more money doing that than paying it will cost them.. So, again.. it hurts small businesses financially and will help Amazon. I have NO sympathy for them as far as the comment about how it would hurt them competitively. Tell them to charge their customers the same shipping rates it costs me to ship products so it's fair and competitive for the rest of us! And, yes... I'd guess that shoppers do care about the sales tax issue.. as in our business we can see that a few dollars difference in the shipping price really affects our sales... So, I'm sure the cost of sales tax will do the same thing.
DelBianco:
drink some coffee. then talk to your children if you have any. they are simple and wise enough to correct your error.
i live in california. i have shopped online since the early 90s. i give you direct testimony that i actively use "e-commerce" because i want to avoid sales tax. i have spent tens of thousands of dollars (not including car purchases which i grudgingly pay sales tax for) on line. one very big reason, is to avoid sales tax.
in the end, i want a lower price for commodity goods. and when the only service the state of california provides me is the infrastructure the fedex man uses to deliver my goods for which fedex pays multiple taxes for and i reimburse it, i see no reason to pay sales tax to california for interstate commerce.
marketplace, you need to screen your interviewees better. gee whiz, use some common sense, common to a 7 year old.
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