Internet Sales Taxes Need Rethinking

A new poll just out by Gallup shows that support for an Internet sales tax is more unpopular than ever. According to the poll, 57% of respondents oppose implementation of the Marketplace Fairness Act, with only 39% wanting it passed. When you break out a younger age group, an astonishing 73% of consumers aged 18-29 oppose the implementation of an Internet sales tax. So with the overwhelming majority of Americans opposed to an Internet sales tax, why are some lawmakers attempting to push the Marketplace Fairness Act through Congress? The answer is that there are some very powerful business interests who stand to gain from it.

Big Businesses, such as Amazon, are pushing very hard to see this new law implemented. While for years it has opposed the new sales tax, it’s now come around—presumably, because they’re now big enough where it wouldn’t affect them. Amazon has teams of accountants and lawyers who can keep them compliant in the dozens of new jurisdictions that would be created due to the law. But Amazon hasn’t had a problem dodging the sales tax wherever they could, up till now. As Katie McAuliffe points out at Forbes, Amazon has carved plenty of favors for themselves in a number of states, exempting them from sales tax even when they do have a physical presence in that state (in the form of a distribution center).

What most don’t realize is that although Amazon has been skating by in many states with sales tax exemptions, if this law were to go into effect, there would be no stopping Amazon. Many feel that the lack of sales tax on Amazon products has been a benefit to them and a detriment to brick and mortar locations. It has, to an extent. But as the most recent issue of Fast Company pointed out, the sales tax laws may be the only thing holding Amazon back from completely wiping out the mom-and-pop shops.

If the Marketplace Fairness Act were to pass, there would be no reason for them to hold back from expanding, as they’d now face the same laws and same scrutiny as everyone else. That would leave Amazon to move onto their next phase of business—that of same day delivery of products, produce, groceries and a host of other products. Could you imagine being able to go online, order a product, and have it delivered to your doorstep the same day? If I were a brick and mortar retailer, I wouldn’t want to imagine that day. With the resources of Amazon, one of the largest companies in the world, they could position themselves as the end-to-end solution for all of your product needs, truly finishing off the last of the mom-and-pop brick and mortar stores. Retailers might rue the day they ever wished Amazon to be on “even-footing” with them.

The Internet was once a place free of the regulations and politics that so often plague businesses and consumers—unfortunately, it’s now full of policymakers and Big Business interests who are trying to game the system to handicap their competition and make themselves more profit.

The Internet is responsible for thousands of entrepreneur success stories, billions of dollars in revenue for the economy, and millions in cost savings for consumers. To see continued success, policymakers should continue to let e-commerce grow, unimpeded by the regulatory and bureaucratic quagmires that have enveloped much of the rest of the economy.

Zack Christenson writes on digital tech issues for the American Consumer Institute Center of Citizen Research, a nonprofit educational and research institute.  For more information, visit www.theamericanconsumer.org.

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