States Losing $7 Billion in Taxes to Online Merchants
States are likely
to push measures that require online merchants to collect sales tax on
transactions conducted with customers located within their borders as more
face budget shortfalls along with heavier demand for services in an environment
of high unemployment.
to a report by the nonpartisan Center on Budget and Policy Priorities, states
are losing out on roughly $7 billion a year on sales taxes as consumers shift
more purchases online. Some states, such as New York, have adopted legislation
requiring retailers to charge sales tax if they have affiliates operating within
their borders. So-called “Amazon” laws tax items sold online that are taxed
when sold in stores within a given state.
fought against the adoption of such legislation, arguing it places an administrative
burden on e-tailers.
The Center on
Budget and Policy Priorities dismisses Amazon’s claim and
asserts the company “calculates and collects sales taxes in every state
except one for the Target department store chain, which has outlets in
those states and therefore acknowledges an obligation to charge tax on
its Internet sales made on Amazon’s site. The fact that Amazon charges
sales tax in connection with other companies’ sales but not its own suggests
that Amazon’s primary goal is exploiting its price advantage and not avoiding
sales tax compliance efforts and costs."
Discussion Question: Should online
merchants be required to collect sales taxes even if they do not have a
physical presence in states where they sell products? How would the imposition
of sales taxes on all online purchases affect the growth of the e-tail
- US states losing $7 bln a yr in sales taxes-report – Reuters
- Amazon’s Arguments Against Collecting Sales Taxes Do Not Withstand Scrutiny
– Center on Budget and Policy Priorities