Back and Forth on “Amazon Taxes”

December 22, 2009

Penelope Lemov interviews a proponent and an opponent of state “Amazon taxes”—whereby states force out-of-state businesses to collect sales taxes. Such laws create an advantage for brick-and-mortar retailers over their Internet-based competitors, and allow states to expand the reach of their tax laws beyond their borders. Some snippets:

Steve DelBianco: It’s all pain and no gain. Businesses that host ads in exchange for commissions on sales are finding that when a state passes this law, the advertisers stop advertising with the Web sites in that state.[…]

Newspaper ads in the Washington Post refer readers to a Web site for a good deal, or you might watch an infomercial on television and dial an 800 number to buy something. In all those cases, the advertiser pays a commission to the newspaper or TV station. Those transactions are not covered by the affiliate nexus law.[…]

Michael Mazerov: Many low-income people don’t have computers, high-speed Internet access or credit cards, so they shop in stores. It’s upper-income people who tend to benefit from not having to pay sales tax online.[…]

The complexity doesn’t justify an exemption for similarly large and sophisticated companies like Amazon, which are capable of complying with existing rules. The argument of complexity for a small business is a legitimate one.[…]

I understand Amazon wanting to send a message by cutting off affiliates in a couple of states to scare those states off, but I question whether they could actually do that if every state enacted a similar law.[…]

Read the full interview here.

Read our report on “Amazon taxes” here.

Was this page helpful to you?


Thank You!

The Tax Foundation works hard to provide insightful tax policy analysis. Our work depends on support from members of the public like you. Would you consider contributing to our work?

Contribute to the Tax Foundation

Related Articles