Amazon, Sears both support federal sales tax collection plan
I’ve written quite a bit about so-called “Amazon laws”, which basically seek to compel retailers to collect sales tax for a state when they previously did not have to do that.
There have been a hodge-podge of approaches by the states…and different reactions from Amazon.
I’ve suggested before that it was going to be settled at the federal level: by the Supreme Court (because it involves interstate commerce, it is a constitutional issue) or by the Congress.
Now, Senator Dick Durbin and Representatives Dick Conyers and Robert Welch (along with other co-sponsors) have introduced a bill to standardize sales tax collection (but not rates) at the federal level.
Bills don’t always become laws, of course…you may remember the Schoolhouse Rock “I’m Just a Bill” video.
One of the big things that affects that is who supports a bill and who opposes it. Organizations (including corporations) may spend a lot of money on one side or the other…even run television advertising.
That makes sense: they may be seriously impacted by something becoming a law.
The two corporate sides in this case are large internet retailers (Amazon, Overstock, eBay), and large brick-and-mortar retailers (Wal-Mart, Target, Sears).
The idea of federal sales tax collection standardization is presented as protecting small businesses…this one is called the Main Street Fairness Act. Many bills have names which have more to do with stirring up emotions than describing what they do. In this case, one could argue about what is fair (internet retailers don’t collect sales tax on certain sales…but brick-and-mortar stores don’t have to deal with shipping and handling), but you also aren’t going to find those big retailers on Main Street…unless it goes five miles out of town and has pastures along the side.
So, the first interesting thing about this bill is that both Amazon and Sears support it.
Amazon has said that they wanted a national policy, and a
from Amazon’s Paul Misener, Vice President for Global Public Policy, is linked from the
on Durbin’s official site.
eBay is reportedly opposing the bill. eBay certainly has a lot of “small businesses” (many wouldn’t even qualify as a business to most people), and sellers who aren’t used to collecting sales tax. Amazon certainly knows how to collect sales tax…I think more than half of their revenue comes from places where they collect sales tax. You can see why there might be a split there.
My guess is that the bill will have a lot of corporate support.
However, it is worth noting that all of the sponsors and co-sponsors are, I believe, Democrats. That might suggest some opposition from within the House and Senate.
What does it actually say?
Well, that should be, “What do they actually say?” The House of Representatives and the Senate will have different bills, then they’d have to reconcile them…you probably know how that back and forth can go.
Here’s the House bill:
H. R. 2701 (pdf)
This is Section 3, the findings:
4 SEC. 3. FINDINGS.
5 Congress makes the following findings:
6 (1) States should be encouraged to simplify
7 their sales and use tax systems.
8 (2) As a matter of economic policy and basic
9 fairness, similar sales transactions should be treated
10 equally, without regard to the manner in which sales
11 are transacted, whether in person, through the mail,
12 over the telephone, on the Internet, or by other
14 (3) Congress may facilitate such equal taxation
15 consistent with the United States Supreme Court’s
16 decision in Quill Corp. v. North Dakota.
17 (4) States that voluntarily and adequately sim18
plify their tax systems should be authorized to cor19
rect the present inequities in taxation through re20
quiring sellers to collect taxes on sales of goods or
21 services delivered in-state, without regard to the lo22
cation of the seller.
VerDate Mar 15 2010 04:21 Jul 30, 2011 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2701.IH H2701 smartinez on DSK6TPTVN1PROD with BILLS
•HR 2701 IH
1 (5) The States have experience, expertise, and
2 a vital interest in the collection of sales and use
3 taxes, and thus should take the lead in developing
4 and implementing sales and use tax collection sys5
tems that are fair, efficient, and non-discriminatory
6 in their application and that will simplify the process
7 for both sellers and buyers.
8 (6) Online consumer privacy is of paramount
9 importance to the growth of electronic commerce
10 and must be protected.
There are some important points there, certainly.
Here is the Senate bill:
At this point, they are not substantially different. I’ve skimmed both, but I’m not sure they are exactly the same…they’ll both change going forward anyway.
What impact will these have on you, as a Kindleer?
Let’s assume they pass pretty much as proposed. States have to simplify their sales taxes, and wherever you buy something (in a store, online), sales tax is collected at the time of sale.
Are you going to owe more sales tax?
Nope…unless for some reason states raise sales tax rates in response, but they are going to get so much more money this way I don’t think that’s likely.
Are you going to pay more sales tax?
I would guess that’s true for the vast majority of internet shoppers.
When we pay our annual state taxes, we calculate what we purchased from internet retailers, which ones haven’t taxed us already, add up the appropriate sales, and then pay a lump sum…and it can be pretty high.
When I say “appropriate sales”, that doesn’t include Kindle books…my state, California, doesn’t tax e-books delivered electronically. We go ahead and pay taxes on everything else: it’s just too complicated to figure out which items should be taxed and which shouldn’t.
I’m sure that means we tend to overpay. Philosophically, we’d rather accidentally pay too much than pay too little. My understanding is that the majority of people pay too much on their taxes…but that may be due mostly to not finding all the deductions.
This legislation would be a big advantage for us: we’d be paying those sales/use taxes throughout the year, rather than all at once, and I wouldn’t have to do the calculations myself.
It could lead to more standardization of sales tax rates, but I think that’s not as likely. We pay close to nine percent, quite a few other states pay around five percent. That doesn’t mean I want to see their taxes go up, though.
There are a lot of possible ramifications here: would people who are tax collectors for the states lose jobs? Would states start taxing more things, since it would be easier to collect the tax? Would having Amazon and other e-tailers collect taxes at the time of sale hurt their marketshare? Would this save your Mom & Pop bookstore (if any)? Does this have any chance of becoming legislation…before the Presidential election? After? Feel free to let me know.
Oh, and I want to thank regular reader and commenter Edward Boyhan for alerting me to this
Wall Street JournWall Street Journal article on Amazon on taxes. It doesn’t mention the MSFA, but it’s still interesting.
A few other related articles:
One minor thing: my Internet went out temporarily after I wrote part of this, so I had to recreate it. I’ll review it more in the morning, but I apologize if it might be a bit disjointed.
This post by Bufo Calvin originally appeared in the I Love My Kindle blog.