Collecting state sales tax from online retailers would help with the national budget. There is currently pending legislation in Congress to do just that and several individual states, for example New York and California are pressing forward to do the same. Texas tried but got bullied to back down by presidential candidate Rick Perry teaming up with the largest online retailer in the country.
The issue can be broken down into a few pieces to be more easily understood. Perhaps call it “Main Street Trickle Down Economics” as opposed to “Wall Street Trickle Down Economics.” These billions of dollars that the states should receive could relieve the federal government from passing down that amount of our federal tax dollars. Then keep those billions which soon would turn into trillions to pay down the national debt. When the country is on better footing, then it would be an appropriate time to talk about providing more state support.
Yes you are right in thinking that you and I are the real ones paying these state sales taxes which range from about 4 to 9%. Yes, you and I always have paid the sales tax on what we buy in a store. It is a populist approach and we have accepted it. But that’s largely not the case when we buy online.
Of most importance is that online retailers are benefiting from that 4 to 9% price advantage over competitors at real stores who have to charge sales tax. Don’t be fooled by the critics who say online retailers need this advantage, particularly start-ups, in order to stay in business. The mom and pop yogurt shop around the corner, the bookstore nearby, and the family owned women’s clothing store at a nearby mall also need to stay in business and they still have to collect sales taxes. Online versus in-store is competitive but let’s be fair.
The notion that this is a new tax on consumers is nonsense. Its not a new tax, its cracking down on tax evasion. Try to buy something at your local stores and refuse to pay the sales tax. You won’t get your item. In fact, the retailer would be heavily fined and could even lose their business license if they let you slide on the tax. Its the law to collect sales tax.
There are stores and customers who play the system and evade the sales tax mostly on large purchases when the tax becomes sizable. Those retailers and consumers who evade paying the lawfully required sales tax are most often in high-end luxury retail and the customer is rich and owns several homes. One trick to exploiting a state’s sales tax loophole is to ship out of state to one of the customer’s other homes their designer clothing or diamond tennis bracelet. Sometimes the retailer and customer secretly agree to ship an empty box to that other home to cover their backsides if there’s an audit, and then the customer just walks out with the merchandise.Continued on the next page