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Tim Lee

Internet Sales Taxes and Fairness

I’d like to chime in in agreement with Adam on the ‘net sales tax issue. I also think there’s another problem with Magid’s argument that Adam didn’t mention:

By exempting out-of-state Internet retailers from collecting tax, the state is essentially discriminating in their favor, over businesses with a local presence which not only collect local and state taxes, but also pay local and state taxes themselves, hire local people who pay all sorts of taxes and also pay rent to local landlords who, in turn, pay property and income taxes that help support our schools and other services.

I love buying things online but I also love how local merchants add to the fabric of our communities. The business climate for independently owned local stores is tough enough. Why should they be forced to charge customers 8 percent more as a punishment for doing business in our communities and contributing to our local economy and job market?

Well, because these businesses use state services. Customers get to brick-and-mortar businesses on state and local roads. These stores use local police and fire services. Their owners and employees go to government schools and use government-subsidized health care. And so, naturally, they’re taxed to help pay for these government services.

Amazon uses state and local services in Washington state, and so they’re taxed to help pay for services there. They don’t use Missouri public services, and so it’s reasonable that they’re not subject to Missouri taxes.

February 25, 2008 | Comments |

  • As things stand now, we're basically subsidizing UPS.
  • That's true, I suppose. I would bet that UPS consumes a lot fewer government services per dollar of merchandise delivered than your average brick-and-mortar store, though.
  • (Tim, the "post" button on your preview page seems to be messed up -- it didn't post my comment.)
  • Well, because these businesses use state services. Customers get to brick-and-mortar businesses on state and local roads.

    But Tim, then you should believe that if I buy something from Amazon, I should have to pay sales taxes in Washington state, right?

    The internet should not be a giant loop hole for corporations or individuals to escape paying taxes, it just transfers power from civic agencies (your local police station, library, or Art Museum) to private capital aggregations, i.e., corporations. We all lose when society is made poorer.
  • EF, if Washington state wanted to tax Amazon's sales to out-of-state individuals, it could.

    And this "loophole" wasn't created for the Internet. Mail order companies have never been subject to the sales taxes of the jurisdictions they shipped to.
  • Yes, Tim I am perfectly aware of the mail order exception, which existed prior to the internet.

    So, your line of thinking would put all local business a structural disadvantage to those that are out of the area, and would eventually lead to a decline in tax revenues as internet sales increased. To me that is a bug, but to those who want to do away with civic structures, it is a feature.

    Just be honest--you would like to make it difficult for governments to tax, as a way of subverting democracy.
  • I will happily admit to being in favor of lower taxes.
  • I will happily admit to being in favor of lower taxes.

    I am in favor of reasonable taxes, and better spending, but I doubt that US tax burden is too high.

    But in any case, my preference is to mediate taxes straightforwardly, through democratic and transparent processes. So, with that preface, which democratic body should be able to levy taxes on the internet?
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