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Marketplace Scratch Pad

The Internet tax Scrooge

Scott Jagow Dec 24, 2009

The LA Times has an editorial admonishing Internet shoppers for not paying tax on the items they buy. It says taxpayers owe the state of California more than a billion dollars.

From the article:

On this glorious day before Christmas, I have a message for all you sales tax scofflaws out there:

Pay up.

This means you. You, who bought your big-screen TV online from Amazon.com instead of at Best Buy and your fleece-lined parka from L.L. Bean instead of Eddie Bauer because Amazon and Bean don’t charge you sales tax and the others do.

Guess what. You owe it anyway.

Author Michael Hiltzik says the billion in lost revenue would pay the salaries of more than 15,000 schoolteachers for a full year; this at a time when California is soaked in red ink (hardly the fault of the taxpayers, mind you). He also says the state makes almost no effort to enforce the law.

Well, there you go. California and other states have made their own budgetary beds; I hardly expect taxpayers to rush to their aid if they can get away with saving a few bucks in this economic climate, and they see how the state has managed its money. Perhaps people would be more willing to pay the tax if there was anything resembling a cohesive policy nationwide or state policies that were stronger.

Hiltzik also points a finger at Amazon:

Once a purveyor of modestly priced books and videos, Amazon now offers big-ticket electronics and more. I found a men’s titanium watch on its website priced at $92,000. Buy it at your local jeweler, and you’d pay about $7,400 in tax…

At least one of Amazon’s claims is worth a horselaugh. This is that sales tax rules are so “horrendously complicated,” with some 20,000 separate jurisdictions nationwide to track, that it’s an “undue burden” to force Amazon to get it all right. (The words are from Amazon Chief Executive Jeff Bezos at the company’s annual meeting last year.)

This from a company that has no problem keeping track of the “millions of unique products” it sells. (These words are from its 2009 annual report.)

What’s your stance on this issue?

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