It’s pretty apparently that both our federal and state governments need more money, and one hot issue that I’ve been hearing a lot about lately is the discussion on whether to allow states to tax internet purchases and collect some much needed money.
Why is this such a big deal? Estimates put the amount of sales tax that goes uncollected from online purchases will total $10 billion this year. Â Another estimate puts the figure as high as $24 billion for 2012. At an average of several hundred million dollars per year for each state, there’s good reason for states to be interested in this huge amount of money they could get their hands on.
But is it something they deserve or just another way to tax businesses that will hurt small businesses and give that money to our state governments. Is it just a fancy way to raise taxes without saying so?
According to a 1992 Supreme Court decision, a merchant is not required to collect sales tax unless the merchant has a physical presence in that state. In response, several states, including California, have started to make it mandatory for online retailers to collect sales tax. As a result, Amazon has closed its distribution centers in those states and no longer has a physical presence.
One of the reasons I shop at Amazon and other online retailers is for the great prices. Why are they cheaper? One reason is that they don’t have to pay all the taxes! Take away a couple percentage points and they’re really selling the same goods for the same price. You’re saving on sales tax, and the retailers are benefiting with more business!
Readers, what do you think? Should online retailers have to pay sales tax (and therefore charge you more money for products)?