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Sen. Dick Durbin (D-Ill.)  (Source: chicagotribune.com)
Senator Dick Durbin (D-Ill.) plans to introduce a bill called the Main Street Fairness Act

Amazon's war on taxes is becoming a tale as old as time. A U.S. state pushes the online retailer to collect taxes, and Amazon simply packs its bags and leaves for the next state that will leave it alone. But this time, that may not be the case.

Amazon is the largest online retailer with over 90 million registered buyers and $34 billion in annual sales. It launched in 1995, and sells everything from food, furniture and apparel to computers, electronics and toys. 

Recently, U.S. states have started pressuring Amazon to collect sales taxes on its items due to the retailer's affiliates operating within those states, and because of large state budget deficits. For example, Texas State Comptroller Susan Combs gave Amazon a $269 million bill in unpaid sales taxes, which led to Amazon's decision to close a local distribution center and cancel all plans to expand in the state of Texas. 

In another instance, Amazon won an exemption on a new sales tax law in South Carolina after saying it would pull a distribution center from the state if forced to collect. Amazon has also cancelled tens of thousands of affiliate accounts in Illinois and Colorado due to tax problems, and has brick-and-mortar chains like Best Buy and Wal-Mart breathing down its neck because of Amazon's "unfair advantage."

The unfair advantage refers to the online sales tax reprieve that was put in place awhile ago to support the then-upcoming industry of online shopping. But now that Amazon is large and in-charge, states and brick-and-mortar retail chains believe this reprieve is no longer necessary.

Now, Amazon may be in an inescapable position as Senator Dick Durbin (D-Ill.) plans to introduce a bill that will require all businesses to collect sales tax "in the state where the consumer resides." The bill is called the Main Street Fairness Act.

"This idea is overdue," said Durbin. "Online retail sales are now very fulsome and are growing at the expense of local units of government." 

Amazon argues that a Supreme Court ruling from 1992 excuses Amazon and other remote sellers from having to collect taxes in U.S. states that do not have the company's employees or warehouses operating within its borders. In addition, Amazon notes that it currently collects taxes in Kansas, Kentucky, New York, North Dakota and Washington, and that buyers in other states where taxes are not collected are to report it themselves, though they rarely do. 

According to a University of Tennessee study, U.S. states will collectively lose $10.1 billion in uncollected sales tax revenue this year. Next year, that number is expected to jump to $11.3 billion. With many state budgets in the red, the collection of online sales tax looks to be a quick fix that they all will continuously push for.

Jeff Bezos, Amazon CEO, has said that he would prefer that the tax situation be "fixed properly" through federal legislation, and this month, he may get his wish. Durbin is gathering support from former mayors and governors who are now in Washington "weighing the budget problems back home," and the issue will go to Capitol Hill by the end of the month.

"Doing it state by state gives the Internet companies an opportunity to go shopping, to find the state that is going to treat them the best," said Durbin. "It certainly argues for a federal approach."

Jason Brewer, vice president for communications and advocacy for the Retail Industry Leaders Association, is unsurprisingly for Durbin's new bill, saying that it's only a matter of time before Amazon will be forced to collect taxes

"Ultimately, this is a battle they are going to lose, and this is about how long they can push off that day of reckoning," said Brewer. "They always claimed to support a federal solution, but they've never lifted a finger to get there."

Even if Amazon loses this battle, it really wouldn't be that bad for the online retail giant. According to analysts at Wells Fargo Securities, Amazon's products would still be cheaper than Wal-Mart or Target even if it had to collect sales tax. In fact, if Amazon had to collect sales tax, it would be 5 to 6 percent cheaper than Wal-Mart and 12 to 13 percent cheaper than Target. In addition, with a sales tax policy in place, Amazon could add new shipping centers anywhere they pleased, and could accelerate shipping time.

With prices remaining lower than brick-and-mortar retailers and items being delivered quicker than ever with cheaper shipping prices, how could Amazon lose?



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RE: B&M Changes?
By foolsgambit11 on 6/4/2011 8:05:47 PM , Rating: 1
And this isn't technically breaking that clause. That clause is a limit on the power of Congress to collect taxes, but this isn't Congress collecting a tax. This is Congress clarifying whether sellers are required to collect state taxes on purchases made across state lines, and for whom they are collecting said tax. When the Supreme Court last ruled on interstate commerce tax collection in Quill (1992), it explicitly stated that, while North Dakota couldn't compel an out-of-state retailer to collect sales tax, "The underlying issue here is one that Congress may be better qualified to resolve, and one that it has the ultimate power to resolve." In other words, it explicitly stated that Congress could do exactly what this bill proposes. That is in theory, at least. In practice, depending on the implementation, the Supreme Court could still find it an overwhelming burden on interstate commerce, considering differing tax rates and definitions of taxable items, etc.


RE: B&M Changes?
By foolsgambit11 on 6/6/2011 2:10:58 AM , Rating: 2
Hooray rate down without explanation! But that's not why I'm posting....

To clarify further, Congress certainly has the power to regulate interstate commerce - Article I, Section 8, paragraph 3. While people may take issue with some laws justified under the commerce clause, this one should be pretty cut and dry, and clearly within the Framers' intent, without resorting to penumbras and emanations (to borrow a well-worn phrase). This is clearly about regulating interstate commerce, and not about regulating some tangentially related thing (e.g. gas mileage for vehicles) by using the commerce clause as a justification. Even the strictest interpretation of the Constitution would allow Congress to regulate in this area - as long as Congress itself isn't laying or collecting a tax, which they clearly aren't.


RE: B&M Changes?
By foolsgambit11 on 6/6/2011 2:23:02 AM , Rating: 2
Additionally (boy, I should have planned this all out in one post), Article IV, Section 1 applies here. "Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof." In this context, that would mean that each State would have to respect the sales tax (an Act of a State) of other States, with Congress determining the implementation (effect) across State borders.


RE: B&M Changes?
By Reclaimer77 on 6/6/2011 8:28:23 PM , Rating: 2
quote:
Hooray rate down without explanation!


Because you are wrong and are pushing a bad position. I posted proof, in black and white no-uncertain terms. Your counter has been nothing but shaky interpretation after interpretation. You would make an excellent Supreme Court justice, sir.

The argument isn't if Congress can "regulate" this. Congress telling Amazon it has to ensure sales taxes are collected for every state is the crux of the issue here. And that's most certainly Unconstitutional. I'm fully aware that the goddamned "commerce" clause in modern times has been used to pass everything under the sun. But technically taxing Internet purchases are Unconstitutional as well.


RE: B&M Changes?
By foolsgambit11 on 8/21/2011 1:37:02 AM , Rating: 2
No, you posted a faulty interpretation of Article 1, Section 9. In this context, the Supreme Court has ruled that "export" explicitly means export to a foreign country, not to another State in the Union. See, for example, Dooley v US (1901), which states that taxes can be levied on goods shipped to Puerto Rico, because it isn't a foreign country.

Additionally, the court has set a pretty tight rule on what constitutes a tax on an export, essentially stating that if the tax doesn't explicitly target exports, then it isn't a violation of this rule; so even if the Supreme Court were to reverse its long-standing interpretation of this clause on the definition of "exports", it would also have to revise its definition of a "tax on exports".

Finally, again, where the Supreme Court has ruled against interstate tax collection (see National Bellas Hess v. Illinois, where it overturned a State law on interstate tax collection), it has explicitly stated that it was because this power is reserved for Congress - which again sets the precedent that it is within Congress' powers to regulate in this area.


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