The Associated Press

Tax-free ... for now.

Featured Topic | Posted 1 year 39 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?

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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.

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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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