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BATSA, the Amazon Tax, and the Physical Presence Rule

2 min readBy: Joseph Bishop-Henchman

We’re getting a good amount of interest in the issues surrounding New York’s attempt to 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. 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 taxationDouble taxation is when taxes are paid twice on the same dollar of income, regardless of whether that’s corporate or individual income. , preserves democratic accountability, and shields businesses from the burden of tracking 7,400+ sales tax baseThe tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority. A narrow tax base is non-neutral and inefficient. A broad tax base reduces tax administration costs and allows more revenue to be raised at lower rates. s 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:


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