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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 callmeroy on 6/6/2011 2:40:07 PM , Rating: 2
Your logic is sound and I agree with it...the problem is were aren't politicians, our views on the matter aren'g going to be weighed against people voting to re-elected (re: re-hire) us for our job again.

And that's the whole game of being a politician...all these social programs that so many depend on these days -- (and yes some are in legit need , but a LOT of people work the system that shouldn't get the aid they get) -- if you cut the spending all over the place then out of the wood work you have all this group and that group or this association and that association crying foul and then taking out TV spots to fling mud at you and generally doing whatever they can to kill any hopes you win your next term.

Not saying its right...just saying that's WHY politicians are scared to death to cut spending too much -- basically putting their own self interests in front of the country.

But there's several problems with our country right now...

1) We are in fact, becoming a nation of sissies. The "PC" culture, handle every creed, ethinicity , etc. with kid gloves, being afraid to enforce the concept of "You are responsible for your own actions"....that is killing us in more ways than one and apparently no one gives a rat's arse about it.

2) Banks. I think they finally learned their lesson from the fiasco meltdown that hit the boiling point back in 2008..but it should have NEVER gotten as bad as it did or is now. Lending standards have to be high, there has to be PROOF that you can REALISTICALLY pay back that which you borrow. I know how this killed us more than many -- I worked at one of th top 30 mortgage banks in the country that was killed due to the collapse in '08. I've seen people approve purely crap loans and not think twice about it. (Btw, I wasn't one of those approving loans, I was in IT)

3) Probably the hardest , but yet most imporant compoment is simply CONFIDENCE. Both with businesses to invest, expand and hire and consumers to SPEND. And yes I said it .. SPEND. But the assumption of this point is -- SPEND on what you HONESTLY can afford, but still SPEND!

If you are unemployed for instance...you aren't one of the people I'm talking about to spend spend spend now...but if you are fortunate to be doing ok now...you really want to help the economy -- back with your confidence and spend.

And btw I have put money were my mouth is on this one...I've been renovating my condo for almost the past year now...so far $20k spent. Plus I bought a new car...so I have definitely contributed my part as a consumer...that's for damn sure. :)

4) Then its government...they have to man up...do some cuts even where it will be controversial...tough times call for tough measures...


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