Internet to Collect State Sales Taxes

For over a decade, anyone with an internet connection has had the choice to buy commodities online instead of by telephone, by mail or by actually visiting a wholesale outlet or retail store. As with phone and mail retailers, online retailers rarely bothered to collect the sales tax that you actually owed. And states didn’t do anything about it until recently. As widely reported, Congress is about to make a bit harder to avoid paying state sales tax:

The Marketplace Fairness Act would allow state governments to force Internet retailers to collect sales taxes from their customers and remit the proceeds to state and local governments, just as brick-and-mortar retailers have done for decades.

Small government conservatives like Grover Norquist claim that they are not pleased to see additional tax collected, but I doubt that defeating a small, regressive tax is on their must do list. Also, Norquist doesn’t seem to have much influence on this tax bill when mom & pop constituents complain directly to congresscritters about Amazon eating their profits.

The states would be required to provide free software that would be embedded in retail Web sites to do the calculations.

One wonders if that free software is, “worth every penny,” because Amazon thinks they can turn a profit by processing online sales taxes for small retailers that sell across state lines.

Saving sales tax, of course, was hardly the whole reason behind the success of internet commerce. Driving to the store was more immediately gratifying than ordering, but online companies offer anything and everything, and driving has become both more expensive and more of a nuisance. E-commerce outlets were able to take orders quickly, ship fast, and cut their margins enough to compete with and eventually dominate traditional retailers. You did have to pay shipping, which on some items was just about the same as the sales tax, but online companies also had far lower margins and markup, as I found out when shopping for tires.

Collecting sales taxes may make a small dent in the profits of US online retailers, but they can easily open and operate supposedly offshore sites, as is done in online gaming. Fortunately I charge all my readers exactly what the traffic will bear, and thus collect no sales taxes.

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