Should Congress enact an “Amazon Tax?”
On May 5th, the U.S. Senate overwhelmingly passed a bill which would enable states to collect sales taxes due for online purchases. The bill is facing great resistance from U.S. House Representatives who have vowed to defeat the Marketplace Fairness Act. New Hampshire and Montana oppose the bill because those states do not impose a sales tax (isn’t that nice). Most online merchants, except most noticeably eBay and OverStock.com, oppose the bill.
The Senate bill exempts online merchants with annual revenues of less than $1 million. Some have advocated for the exemption to be raised to $10 million. Advocates of the bill argue that the current tax structure creates an inherent disadvantage for “brick and mortar” stores.
I agree. I will be the first to admit. I like not paying sales taxes on my online purchases (mostly Amazon). Many people don’t know that you still have to pay states taxes on online purchases. Technically you are supposed to add all your online purchases and multiply it by your state tax rate and then include it on your tax return. Most people however don’t do this. It is estimated that states lose some $23.3 billion in revenue each year—a burden spread among other taxpayers.
I don’t think it is fair to businesses, in particular small businesses, to compete with giant online companies who don’t charge their customers a sales tax. You can’t really compete with that option, especially for larger purchases. Online purchasing will only grow as more and more people use the internet to convenience their lives (i.e. online bill pay, online banking, etc.).
I don’t think states that don’t enforce a state tax should be forced to do so. Customers should be charged a state tax in accordance to their respective residence. As someone who lives in a state (Illinois) with exorbitant taxes (9.25% sales taxes (it used to be 10.25 %!)) I was at first against the notion of enforcing the tax at the point of sale. But my personal reluctance shouldn’t be a factor in national policy.
I reluctantly (only in that I don’t want to pay more taxes) support the Senate bill. However, I would rid the $1 million exemption. Small businesses with “brick and mortar” stores don’t get exempt in enforcing a sales tax for that same threshold. Unless the government plans to share the exemption with them then I don’t see how it is fair. I don’t think the bill raises taxes. It only enforces the taxes one should be paying on their tax return at the point of sale; which equals the playing field for businesses.
Do you think online merchants should be forced to apply a sales tax?
Twitter: @adrakontaidis & @talkrealdebate