Amazon vs. state sales tax

I buy a ton of stuff on-line.  I love that I almost never have to pay sales tax (one reason I almost never buy from B&N, which, unlike Amazon, has a physical presence in NC and must charge sales tax).  That said– this is wrong.  At this point, there’s really no good reason to give on-line stores such a competitive advantage.   Farhad Manjoo has a nice piece on this in Slate.  My favorite part:

There are two powerful arguments in the tax debate between Amazon.com and the state of California. On the one hand, there’s simple fairness. For years, online retailers—which weren’t required to collect sales tax on purchases from Californians—have enjoyed a huge advantage over physical stores, which must collect sales tax.A $1,000 TV from your local Best Buy costs about $1,100 with tax; at Amazon, it costs exactly $1,000. Technically, residents who purchase stuff from out-of-state online stores must pay a “use tax” on the merchandise on their annual tax return, but almost nobody does that. Late last month, California Gov. Jerry Brown signed a bill that forces large online retailers to collect taxes from residents. The government estimates that the legislation will bring in more than $1 billion a year in revenue. Tax proponents also argue that the law will let the state’s businesses compete against online stores, thereby creating local jobs.

And then there’s the other side of the argument: ARE YOU KIDDING, YOU WANT TO RAISE MY PRICES, WTF???

Yeah, that’s pretty much it.  One of my former students is actually a lobbyist, who works for Amazon’s anti- sales tax crusade in NC.  He went into the whole Amazon pitch one day.  Needless, to say, I was not impressed with the quality of the arguments.  I actually said to myself (not out loud, I do have a bit of a filter) “do legislators actually buy this BS.”  Manjoo’s conclusion:

The reasons for Amazon’s tax battle are obvious. It’s not that it can’t institute a sensible tax collection regime, but that it won’t, because it has no incentive to do so. Amazon’s position may be indefensible, but it has a trump card. Raise your hand if you want higher prices. Yeah, that’s what I thought.

Well, if it means fairer competition and more state revenue, you just heard my hand go up.

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About Steve Greene
Professor of Political Science at NC State http://faculty.chass.ncsu.edu/shgreene

One Response to Amazon vs. state sales tax

  1. Mike McAuley says:

    They way I see it, Amazon fighting against having to collect sales tax is simply a matter of doing their fiduciary duty to their shareholders. On the other hand, it is the responsibility of state governments to challenge Amazon on this matter. I applaud California’s lawmakers and governor for having the guts to push through a law that is almost certainly as unpopular as it is fair.

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