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 taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. 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 taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. 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 our report on “Amazon taxes” here.
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