Chris Christie supports equal collection

Chris Christie supports equal collection

I’ve written before about the issue of equal collection legislation.

The basic idea is that many residents of states don’t pay the use tax that they usually owe when they purchase items from out of state sellers.

It’s different with in-state sellers (such as your chain brick-and-mortar stores, or “Mom and Pop” stores). Those stores can be compelled by the state to collect sales tax at the time of sale.

Most people, I think, perceive this as meaning that you don’t have to pay sales tax on out-of-state purchases from places like Amazon, even though that’s not what it means. Oh, I suppose you don’t “have” to pay it, but you owe it in the same way that you owe income tax.

Different states have tried different ways to redefine things with so-called “Amazon laws”.

Amazon itself supports a national sales tax policy (not a national sales tax). They want all internet retailers to have to collect the sales tax at the time of sale. Why would they want that, when it presumably gives them a competitive advantage not to have to do it?

For one thing, they don’t want to be singled out. If they collect sales tax, other online retailers should have to collect sales tax the same way.

This has also been perceived as something Republicans would support less than Democrats. It is additional regulation on businesses: it may be perceived (again incorrectly) as raising taxes (rather than as changing the collection method).

That’s why it’s big news that Chris Christie, a leading light Republican, has supported equal collection:

Wall Street Journal article

Christie doing it may lead to other Republican governors supporting it.

However, it’s important to note that this is a deal between New Jersey and Amazon…it isn’t Federal regulation.

I also want to point out that there are people who think that having equal collection policies (however they are achieved) will right a wrong and allow brick-and-mortars to compete more fairly with online retailers.

I’ve said before (as a former bookstore manager); brick-and-mortars can’t compete with the internet on selection. I don’t think they can compete with it on prices (even with sales tax collection). Online retailers can charge for shipping, but I do think it is more efficient to be an online retailer in many cases. One big issue? No shoplifting. Yes, you’ll still have employee theft, but shoplifting is a much bigger issue than you think.

It will “level the playing field” a bit, though.

I’ll go back to my basic principle: people will shop in a brick-and-mortar, paying higher prices, having the inconvenience and expense of driving there, and having the smaller selection…because they like the people who work in/own the store and want to support them.

That’s the trick. I know, I know…it’s easier said than done.

“Another romantic lunacy.  We assume that a personality problem can be liquidated merely through an understanding of it – as though a man could lift a mountain once he admitted it was heavy.  No: recognition is not synonymous with solution.  I fly toward freedom as a moth toward the candle, and nothing so insubstantial as Reason will turn me aside.”
–Dr. Charles “Doc Bedside” Bedecker
Chthon
written by Piers Anthony

While this is a very tough time to get anything passed at the Federal level, I could see how, if all the states had already required equal collection, the Feds would then step in to unify it.

States have a significant motivation to make this happen (they need the money), and Amazon has a significant motivation to guide the process so the impact affects them and their competitors evenly.

Are the days of no tax collection on internet sales numbered? Not numbered, I think…but an end seems likely.

Oh, I should mention (despite that being a good exit line) ;) that most of the proposals I’ve seen for this have minimum sales thresholds. If  you sold your old bicycle on eBay, you might not be required to collect sales tax (the buyer would still pay use tax, I think). If you sold a thousand old bicycles, that might be different. Think of it selling just a few items like having a garage sale, in terms of enforcement.

What do you think? Will there be a national policy mandating collection of applicable sales tax on out-of-state internet purchases? Would that violate the interstate commerce clause? Does it matter for this issue which party wins the Presidential election? Is the current situation unfair? Feel free to let me and my readers know by commenting on this post.

This post by Bufo Calvin originally appeared in the I Love My Kindle blog.

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9 Responses to “Chris Christie supports equal collection”

  1. Man in the Middle Says:

    Amazon has pointed out that small on-line businesses are the ones most affected by any new rules making them collect sales taxes for all jurisdictions. I help ou in a small bicycle shop that occasionally sells and delivers something to an out of state customer. If we were simply required to collect and remit whatever sales tax each customer owes to each jurisdiction separately, doing so would become a logistical nightmare for us. At best, we’d end up having to hire some other firm to handle it all for us, and at worst we’d stop selling anything on-line.

    What Amazon has supported is the idea of simplifying the number of separate sales taxes to be handled, ideally down to one per state. Anything along those lines would help small on-line vendors. But so far it seems no taxing body is yet willing to give up their very own special local sales tax rate that applies to just their town or county, even if the alternative is to receive no sale tax at all for on-line sales.

    If forcing all on-line vendors to collect and remit all existing sales taxes to all taxing bodies separately is the end of the matter, expect Amazon to survive just fine, but also expect a lot of small on-line firms to go out of business.

    Burdensome regulations, in the end, favor large companies over small ones.

    • Bufo Calvin Says:

      Thanks for writing, Man!

      I think, at best, there would be government-provided software that would handle those 8,000 jurisdictions for you. I don’t think that would be complicated, and states would likely support the development in exchange for collecting all that sales tax.

      Another possibility is to simplify it, but as you say, that requires all those cities and such to revise their taxes, and that’s a heterogeneous nightmare.

      Edited to add: the bicycle store’s out of state sales might also be under a threshold.

  2. Tom Semple Says:

    Personally, I think it is a good idea and hope it happens sooner rather than later. Unfortunately everything is politicized to the point that good ideas are often rejected until potential benefits have been squandered.

    Amazon is for it, because they want to do same day shipping and this would grease the wheels for that. I think this is the end game they have been preparing for. This is not really going to level the playing field for bricks-and-mortar, it is the beginning of a new death struggle. Who really wants to spend an hour getting in and out of Walmart, Costco, etc. when you can have the same thing delivered to your door FOR FREE the same day with one click? Time is a very constrained resource for most people today, and I don’t see that trend easing up. I would not be surprised to someday see, in the not distant future, Amazon warehouses opening where big box retailers and shopping malls now hold sway. With a fleet of Amazon robots spreading out from there and delivering the goods 24/7 (once driverless vehicles make their appearance). Of course Walmart will set up its own same day delivery, eventually. But I think oxygen will be sparse for lesser retailers.

    Of course none of this affects sales of digital goods, at least in CA.

  3. amacd55 Says:

    I live in KY and I pay a 6% sales tax on my Kindle books, so my $0.99 books are $1.05 and have been for at least several years.

    • Bufo Calvin Says:

      Thanks for writing, amacd55!

      That’s because Amazon has a fulfillment center in Kentucky, and so is treated as doing business there. That allows KY to compel that sales tax collection under the current system.

      Oh, and the other factor is that Kentucky is taxing e-books delivered electronically…not all states do that (California, where I live, doesn’t), basically on the idea that it is a contract rather than a commodity, I believe.

      • Tom Semple Says:

        Yes, ebooks (digital content in general) don’t obey ‘first use’ practice. For example, you can’t transfer ownership because you don’t have ownership in the first place. I guess that doesn’t stop some states from taxing it anyway (wonder if there are any lawsuits challenging this?).

        Then there’s the energy/environmental policy angle: favoring digital rather than physical consumption, in theory, uses less energy and fewer resources consumed. I’m not sure that is entirely true now, but it should be as we get smarter about designing sustainable systems.

        Beyond that, an argument could be made that the public interest (‘an informed electorate’) is served by making an exception of media (both digital and physical), just as periodicals are not generally subject to sales tax. What is so special about periodicals? Is the information we read in NYT (or see in Fox News) more relevant to the choices we make in life than values and ideas communicated via literature, music, visual arts? Doesn’t making an exception here help give more space and substance to the conversations we need to have with each other? Probably a little lofty to base tax policy on, though..

        Then there’s selfish self interest, of course. I don’t want to pay more for my ebooks!

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