If you are a local retailer, chances are you are rooting for the Internet tax bill that passed the U.S. Senate on Monday. That’s because, as a retailer, you are mandated by law to collect taxes on every sale you make. Then, you have to fill out forms and send taxes you collected to the state.
But your competitors who sell the same goods as you do — but on the Internet — don’t have to collect that tax. That puts the local merchant at a competitive disadvantage.
But wait — there is more. States and municipalities are denied the taxes Internet customers don’t pay, which means they have less money to pay for schools, public safety and other public services.
And then, when brick-and-mortar stores go out of business because of untaxed Internet competition, they have to fire their employees and leave empty stores, which lowers real estate values in many cities.
For years, amazon.com, the bookseller, fought having to collect taxes because the financial advantage that gave them was part of their business plan. It enabled that company to underprice local book stores and drive them out of business.
Now, however, Amazon has changed its mind and supports the collection of taxes on sales — for at least two reasons. First, it has been building physical facilities in many states, and the law requires the collection of taxes on all sales in any state in which one has a physical presence, whether the sale is made on the Internet or not. Second, that means Amazon finds itself in the same situation as its locally located competitors found themselves when Amazon was rolling over them by not collecting taxes.
Let’s hope the House also sees the wisdom in leveling the playing field for all businesses by mandating the collection of local sales taxes on Internet sales.