Should you pay sales taxes for Internet purchases?

The Associated Press

Tax-free ... for now.

Featured Topic | Posted 1 year 8 weeks ago

Should you pay sales taxes for Internet purchases?

One advantage Amazon.com has had over brick-and-mortar retailers has been simple: No sales tax. Internet retailers have long avoided paying -- and charging their customers for -- the sales taxes that must be charged by their meatspace cousins. The real-world retailers have complained that the cyber-business thus has an unfair competitive advantage.

Now New York is trying to force out-of-state Internet retailers to collect taxes on purchases made by New Yorkers. Amazon is suing, saying the new law is unconstitutional, vague and overly broad.

Should states be allowed to charge sales taxes on Internet retailers?

Ben likes: Tax will hurt small businesses

Jonathan I. Ezore/Newsday

When news of the new "Amazon Tax" spread, most New Yorkers probably thought it just meant they'd have to start paying a little more when they ordered online merchandise. But the law, passed in Albany last month, is likely to have a far greater effect on small businesses than it is on consumers.

Critics of the new law say it is unworkable because tracking multiple sales tax rates is difficult - particularly for smaller retailers - while supporters counter that software tools are making this easier. But the reality is that Amazon and other merchants with affiliate programs won't bother adding the additional capability to collect New York tax; instead, they'll take the far easier step of blocking any New York-based site from their affiliate programs. The result will be a tremendous loss of income for the numerous small New York businesses now participating in affiliate programs.

If New York wants a larger share of online sales tax revenues, it should focus on making the state more attractive for online retailers to set up shop here, and improve enforcement of existing tax laws. Instead, the Amazon Tax will hurt New York's small online businesses and entrepreneurs, and ultimately may lower overall tax revenues, while strengthening New York's reputation as being unfriendly to small businesses.

Joel likes: The case for online sales taxes

McClatchy

As brick-and-mortar retailers struggle in this tight economy, online sales continue to grow. One reason is their tax-free status.

Not only is this unfair competition for local business; it deprives public agencies of substantial sales tax revenue.

The competition factor has a large ripple effect. When local retailing operations diminish, jobs are lost and companies don't spend as much for everything in the local economy from site costs to advertising.

One can't whine about competition itself. Many customers like shopping online, and companies push those sales right along with sales in their stores. But unfair competition is something else, particularly when provided through unequal taxation.

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Thoughts

Government is a service

Submitted on April 19th, 2009 by gerthdynn

To put it simply, government is a service. Sales tax on brick-n-morter stores makes sense as this local resource is using significant public resources. Internet stores get stuck in this limbo. Sure, sales tax from stuff their employees buy will fund various governmental services, but in general the warehouses that use as much or more of the public resources as large brick-n-morter stores don't give much back to the community they are in. So in essence, what New York wants is all of the money without providing much if any of the services that they must provide for other retailers and at the same time not reimbursing the communities that are actually affected by the higher public resource utilization.

I should go back a second. When I'm referring to public resources, I'm referring to roads, sidewalks, signal lights, law enforcement, street lighting, snow removal... etc etc etc. These are the basic services that the government provides that allow brick-n-morter business operate. You could say that the delivery services such as FedEx and UPS are making up for the resource under-utilization by internet business, but you can't completely state that.

This really goes back to the age old problem. Large centralized conglomerations are more efficient, but they detract from local businessmen. This was the case with farmers, with grocery stores, with small electronics stores and appliance stores. In general, the true "mom-and-pop" businesses have been destroyed by large conglomerations. Now the large conglomerations that destroyed most small businesses are complaining that they can't compete with Amazon and other internet retailers after they undercut local competition by being more efficient or in some cases just taking a loss which the smaller stores couldn't do.

So now we get back to one more fundamental question that Amazon asked as to the constitutionality of the tax. Our government is based on the concept of taxing with representation. Thus the only government that has the right to regulate interstate traffic is the federal government. This sounds an awful lot like a really good constitutional question that might be struck down my New York's own court system if the federal court system doesn't get to it first.

Paying taxes help the

Submitted on April 12th, 2009 by Kale F

Paying taxes help the government to at least have additional funds. Internet industry is gaining much because we can see all over the world people are using Internet for faster and clear communication. Well Lake Elsinore is a beautiful lakeside community in California. Lake Elsinore is also a great place to buy real estate, if you're in the market. The housing bubble bursting led to a drastic drop in demand, and prices, and even though you can't buy a house with payday loans alone, you can get one for dirt cheap (or at least what passes for it in California) if you can get the financing.