Green light for taxing Internet sales

Tuesday, December 10, 2013
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The U.S. Supreme Court’s refusal to hear a challenge to a 2008 New York state law aimed at taxing Internet sales is good news. It means New York and and other states that are collecting sales tax on purchases from online merchants, even those with no physical in-state presence, can continue to do so. But it still leaves a confusing, inconsistent patchwork of state laws that is a source of annoyance to both online and traditional businesses. The best, and fairest, approach is to have national legislation that treats all states, and retailers, the same.

Main Street retailers have long complained about tax-free Internet sales, and rightly so. It puts them at a competitive disadvantage against online retailers, who already in many cases can sell cheaper due to higher volume, lower overhead and other taxes.

In the early days of the Internet, opponents of taxation argued it would discourage this new form of commerce. If that was ever a valid concern, it is no longer. E-commerce is already huge ($226 billion last year), and the fastest-growing kind. Consumers are now using their local store as a showroom, a place to see and touch the product they are interested in before going online to buy it.

When that happens, it’s not only the Main Street merchant who suffers. It’s also the state and local governments, which are deprived of badly needed revenue. And if the locals are driven out of business, jobs are lost and the tax base is reduced, requiring the remaining businesses and property owners to pay more. A double or triple whammy.

For 20 years the controlling authority was a 1992 Supreme Court ruling that said states could require online retailers to collect sales tax only if they have a physical presence in the state. New York’s 2008 law extended the reach by saying they must collect the tax if they have affiliates or sellers within the state.

Since then New York has collected more than $500 million in taxes it wasn’t getting. But it’s still losing out on about $1.8 billion a year from Internet and catalog sales; and all the states, $23 billion.

With the Supreme Court’s latest non-decision, the states are now free to write their own New York state-style laws. Better for Congress to pass the Marketplace Fairness Act, which calls for the streamlined collection of sales tax on all Internet sales (except for small sellers doing less than $1 million in business.) The Senate has already approved it, but conservatives in the House can be expected to oppose on the grounds that it’s a new tax. It’s not new — just uncollected.

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December 10, 2013
8:21 p.m.
smith says...

The idea that people are using brick and mortar as a showroom before buying online is little more than an anecdotal conclusion. I'm sure it happens, but what happens more is the brick and mortar carries a pathetic sampling of products--they all have the same thing as well--and one is driven to the internet to find the selection they are looking for. I'd much rather buy at a local store and take what I need home with me right now, instead of the pain in the neck order filling on line and waiting for delivery. As for saving on sales tax, the delivery costs remove any supposed savings there; many things cost as much or more when shipping is added in. Adding in the sales tax will make internet sales more expensive than brick and mortar.

December 11, 2013
11:20 a.m.
wmarincic says...

All you liberals do is look for more TAX and FEES. I'm sick of all of the taxes I pay. I pay 40% state and fed income tax, Social Security tax, disability tax. Now I pay sales tax, property tax, school tax, gasoline tax, there is tax on the electric and gas and special excise taxes that goes who knows where and tax on the cable that are a half dozen different taxes and fees and the same on the cell phone. I bet the average person pays 25 to 30 different taxes each week and this state and country are BROKE. There is no accountability. The govt just lost 10 billion from the GM buyout that should never happen. Why isn't GM paying it back? Why don't they supply the govt with 10 billion worth of automobiles at retail cost? More than half of my paycheck every week is gone in taxes probably closer to 60%. Something needs to change in this country, we need to get rid of these MORON Democrats and Liberals, they are killing America and they are way to stupid to even realize it.

December 11, 2013
1:58 p.m.
gazettereader says...

To say the government lost $10 billion on the GM deal is a rather closed-minded way of looking at it. Because of the deal and the jobs it saved, the government is now raking in an extra $40 billion of tax revenue every year. It's a win-win. Like they say, "Reality has a well-known liberal bias."

December 11, 2013
4 p.m.
robbump says...

Those sales taxes and fees have always been there, and NYS businessmen HAD to collect them.
This change just means that others selling to NYS residents (and businesses) will have to do the same work of collecting state taxes as the brick & mortar sellers do. (btw, there IS a small fee earned by businesses, IF they file on time.)

December 13, 2013
7:17 a.m.
wmarincic says...

Gazettereader Ford took nothing. GM would have been a more viable company without the government. I'm in the business for 30 years I know. The government went after republican owned GM dealers and shut them down ie; Salisbury Chevrolet. They stole the pensions from thousands and gave the money to their union cronies. It was a bad deal for most people.

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