Amazon Taxes and “Preferential Tax Treatment”

March 1, 2010

NPR’s Alan Greenblatt reviews the Amazon tax trend. It’s a good article although it omits any discussion of the burden these taxes impose, preferring to take the states’ “lost tax revenue” argument at face value.

Consequently, we get this zinger of a quotation at the end from the left-of-center California Budget Project:

“Why would a state give preferential tax treatment to a business that by definition doesn’t employ a single person in that state?”

The cited “preferential tax treatment” is a non-resident not having to pay taxes. Since non-residents don’t use public services, that’s not what I would consider “preferential tax treatment.” It should be the default rule. Yes, perhaps the CBP and state officials would like to shift tax burdens to out-of-state businesses but that’s poor fiscal policy. The people that use services should, generally, be the ones paying for them.

One of the big reasons we have the U.S. Constitution is because states have always had the incentive of shifting tax burdens to non-voters, particularly by burdening interstate commerce. States that go that route do harm to the national economy, send a signal of business unfriendliness, and contribute to volatility in their own fiscal systems.

More on Amazon taxes here.

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