BATSA, the Amazon Tax, and the Physical Presence Rule

July 17, 2008

We’re getting a good amount of interest in the issues surrounding New York’s attempt to tax out-of-state sales and businesses with its “Amazon” tax, and impact that the Business Activity Tax Simplification Act (BATSA, H.R. 5267) would have on this and other state efforts. This morning’s New York Sun has a lengthy piece on some of the issues as they affect New York.

As a non-profit organization, the Tax Foundation takes no position on H.R. 5267. We believe that a sound tax system should tax like transactions alike while remaining simple, transparent, and stable. Limiting states to taxing only individuals within the state, and only businesses with property and employees within the state, protects interstate commerce from double taxation, preserves democratic accountability, and shields businesses from the burden of tracking 7,400+ sales tax bases and rates. “Economic nexus”—taxing Internet commerce based on where customers are located, but brick-and-mortar commerce based on where property and employees are—creates an uneven playing field and allows states to export their tax burdens to non-voting out-of-staters.

Here’s a collection of some of our work over the past year on these issues:


Blog Posts:

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