Thursday, April 25, 2013

US Internet Sales Tax Push: WalMart+Amazon vs eBay+Yahoo+Overstock

It's rather apparent which side wins. In the US Senate, only those senators whose state does not have sales tax are opposing; everyone else is in for more grab from the consumers who buy online.

Why Amazon, one of the largest internet retailers? Because, in addition to the one given in the Wall Street Journal article below, the company wants to sell its own tax compliance service to other merchants.

In the WSJ article below (4/23/2013), there is not a single mention of "consumer":

Backers and Opponents of Online Sales Tax Ramp Up Lobbying

Both sides in the online sales tax debate were ramping up lobbying efforts and forming new alliances Tuesday in hopes of swaying a coming Senate vote on a bill that would effectively end tax-free Internet shopping in most states.

The bill, known as the Marketplace Fairness Act, would allow states to require online sellers around the country to collect sales tax for them on purchases made by their residents.

The legislation would effectively replace a 1992 Supreme Court decision that said a state can't force a retailer to collect sales tax unless the retailer has a physical presence in the state, such as a store or warehouse. That ruling has led to rapid expansion of online sales that often go untaxed.

The bill is supported by states and local governments, which say they are losing tax revenue under the current system, and by many traditional big-box and Main Street retailers who say online retailers have an unfair price advantage.

In an unusual alliance, Inc., AMZN +2.20% the big online retailer that has benefited from the current rules, has joined in support. Experts say Amazon plans to expand its physical presence in many states in order to speed up deliveries, thereby exposing itself to the tax-collecting obligation. It would prefer that its competitors operate under the same set of rules.

Even more unusual, the legislation draws bipartisan support.

"It's rare to have an issue like this that cuts across party lines, but I do think there is a growing consensus that the time has come to address this once and for all," said Jason Brewer of the Retail Industry Leaders Association, a group of major retailers that support the legislation, including Wal-Mart Stores, WMT +0.78% Target and Best Buy BBY +1.56% .

But with a final Senate vote coming perhaps as soon as Thursday, opponents led by eBay Inc. EBAY -1.15% and other Internet retailers are fighting back, seeking to build on a massive grass-roots push over the last few days.

EBay said on Tuesday that hundreds of thousands of its sellers and users had contacted lawmakers in Washington this week to push for changes to the legislation, in response to a plea for help over the weekend by the company's chief executive, John Donahoe.

A separate coalition of small online retailers expected several thousand of its members to email lawmakers in opposition to the bill.

Grass-roots lobbying over the issue "has ramped up significantly," said Phil Bond, executive director of the coalition, We R Here. "People have heard this before, that the legislation was coming, and it famously never happened. This time people realize we're really voting.…People woke up and got into action."

As part of their "last-ditch effort," opponents were pushing amendments to increase the legislation's requirements that states simplify their tax systems, said Steve DelBianco, executive director of NetChoice, a group of e-commerce businesses such as Yahoo Inc. YHOO +1.82% and, as well as News Corp NWSA +0.26% ., owner of The Wall Street Journal. Among the possibilities: exempting more small online businesses, reducing the number of state audits that businesses could face, and offering an opt-out provision for states that wanted to shield their businesses from the tax-collection requirement.

Online sellers were being joined by numerous conservative and antitax groups that have concerns about the bill, from Americans for Tax Reform and Heritage Action to the Home School Legal Defense Association. Big Wall Street banks and insurance companies also were raising concerns about the possible state taxation of financial services, although supporters of the bill said that objection was baseless.

After the Senate voted 74-20 Monday to move ahead with the legislation, even opponents said the chamber is likely to pass some version of the bill. The legislation faces an uncertain future in the GOP-run House.

(Full article at the link)

Uncertain? Who is the paper kidding? The House is run by the GOP House Speaker whose willingness to accommodate and compromise over the so-called "Fiscal Cliff" has led to effective tax increase of 2% for the dwindling middle class.


Anonymous said...

I guess, nothing ever changes. Squeeze "the little guy" ever so much more to make the wealthy ever so much richer.

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Anonymous said...

Just how much is the consumption tax we are talking about?

arevamirpal::laprimavera said...

US sales tax rates vary by the municipalities. Some California towns have sales tax at over 9%. Some have no sales tax.

Atomfritz said...

Poor people that have to spend all money they earn for living get extra-taxed heavily this way.
In Germany the sales tax is 19%, in some European countries even 25%.
Thus, via the sales taxes (or VAT), low-income people proportionally pay _much_ more taxes than rich people.

Aren't thus sales taxes are one of the most antisocial taxes?

Anonymous said...

Yup. Totally antisocial. Particularly when there is no offset in income tax. California RAISED tax rate, so did the feds.

I stopped buying from Amazon proper, since they caved in to collecting sales tax for shipments to my state. I look for third party sellers who don't charge sales tax.

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