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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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Would have been nice for you to give some consideration in the story to the tens of thousands of mom and pop e-commerce sites. How many of those do you think Mr. DelBianco and NetChoice represent? What do you suppose the size of that economy is? And who do you think these laws will really hurt? Amazon, Ebay, Overstock, they all have the resources to track and deal with the paperwork required to pay taxes on a state by state and even city by city basis, but take a small business and ask them to track and pay taxes across the country and it will be crippling. Many of them will no longer be able to afford to be in business.
How about a story on how this will effect the average small business.
I am a small business owner dealing with this exact thing currently. We've been told that if we go to a trade show in Washington State that we'll have to collect and pay sales tax to that State for the year.. Michigan called and said we owed them sales taxes since 2010 because we hired a contractor that helped us in our business to the total of $600 in fees in 2010. Louisiana has over 1,000 different taxable areas. Pennsylvania collects taxes for counties, cities, townships, etc.. I don't even want to try to figure out California. So, we're not doing business with States that impose these taxes as we can't afford to keep track of collecting them. So, the States are hurting their own people as well as small businesses.
The above comment is totally correct! We can't afford a full time accountant to keep track of these taxes and pay them. So, something has to be done. We want to obey the law, but we can't and stay in business just due to the time of keeping track of everything would take.
So, I'm for either not requiring this for businesses with 25 or 50 employees or less... or, something like that... Or, for a flat internet tax that everybody pays that gets distributed to the States fairly somehow. But, it has to be something that allows a small business to follow the law without too much extra trouble. We're having enough problems being put in a higher tax bracket and made to look like the "rich" in this country when all that "extra" money we're making has already been re-invested in the business as the business would die without creating new products that will hopefully come out in the future, but they won't let us deduct these expenditures so we look incredibly profitable and now they want to tax us on those "profits" which don't exist... Government really seems to hate the small business all of a sudden. I wish we had some sort of group and just all stopped work for a week. Let them see how well the country does without us!
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