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.

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