You might open a newspaper soon to see an ad like the one at right which appeared in my local paper a few days ago. It encourages you to "Stand With Main Street" to protest "special treatment" of Amazon.com that allows them to forgo the collection of sales tax on online purchases, resulting in an unfair advantage over "every Hoosier brick and mortar retailer." I don't usually see full-page ads related to Internet commerce in a market this size, so I thought I'd investigate the issues at stake.
The question of taxing e-commerce transactions is a bit complicated to be sure. If you have a strong and concisely-worded position on it, you're probably running for national political office, or a Libertarian, or both.
On one hand we can see the clear financial and psychological advantage that an online retailer has with customers who are weighing a purchase from a local store that charges tax against an online store that doesn't, and maybe offers the item at a slightly lower price too. At the same time, that online retailer may be benefitting from the infrastructure that sales taxes others are collecting help pay for (setting up warehouses, trucking goods around state roads, etc.).
On the other hand, we know that laws around state sales taxation were created prior to the age of the Internet and that the models of online business and affiliate sales have completely changed the way the world does business, and current attempts to rewrite them in order to create short-term bandaids on ailing state economies are probably not in the best interest of business innovation, especially when they favor large retailers (online and off) and send small businesses and people who make a living as Amazon.com or eBay affiliates into a quagmire of tax collection bureaucracy.
Continue reading "Stand With Main Street ads and taxing online commerce"
