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Paul Misener, Amazon's vice president of global policy   (Source:
Smaller online retailers believe Amazon is using sales tax standards to crush smaller competitors

Amazon asked Congress to set federal standards for states' online sales tax collection in a House Judiciary Committee hearing earlier this week.

Amazon spent a lot of time battling the collection of online sales taxes over the past couple of years. If forced to collect sales tax in a particular state, Amazon would simply pack its bags and move on to another state. This happened in states such as IllinoisCalifornia and Texas.

Amazon got away with avoiding sales tax collection because of a 1992 Supreme Court ruling that excuses Amazon and other remote sellers from having to collect taxes in states that do not have the company's employees or warehouses operating within their borders. However, Amazon said it would comply with sales tax collection of online goods if there was federal regulation instead of different states with different rules.

Now, Amazon is pushing Congress to set standards more than ever. Paul Misener, Amazon's vice president for global public policy, attended a House Judiciary Committee hearing on Wednesday to address the issue of federal standards for collecting state sales taxes online.

Some lawmakers are onboard with Amazon's request, such as Representative John Conyers (D-MI), who sides with brick-and-mortar retailers regarding online retailers' "unfair advantage."

John Otto, an accountant and state representative from Texas, is also onboard with the idea and addressed the concerns of Republican panel members regarding whether the sales tax collection would be viewed as a tax increase.

"This is not a new tax we're collecting," said Otto. "It's a tax we've been unable to collect."

Not everyone is cheering for Amazon's position on taxes, though. Smaller online retailers like believe Amazon is jumping onboard the tax wagon now because it's a chance to hurt smaller competitors. Amazon is so huge now that it can handle being taxed while smaller e-tailers like Overstock could largely be affected by such taxes.

But Misener doesn't see it that way. He said the sales tax collection wouldn’t be as burdensome as the smaller e-tailer's think.

"With today's computing and communications technology, widespread collection no longer would be an unconstitutional burden on interstate commerce, and Congress feasibly can authorize the states to require all but the very smallest volume sellers to collect," said Misener.

Sources: The Consumerist, BusinessWeek

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RE: Agree with the taxing or not...
By Motoman on 12/4/2011 9:46:21 AM , Rating: 2
Lack of sales tax is the incentive to buy online.

No it's not. Because, after all, we all pay the use tax we owe on out of state purchases for which sales tax isn't collected at the POS right?

Besides, it is eminently clear that the sales tax "benefit" is the least of all other online benefits. Namely...

1. The price of the products themselves are generally considerably less than in B&M stores. Sales tax or not on top of that price is a moot point - still saving lots of money either way.

2. Nearly infinite product selection online.

3. Nearly infinite product information and reviews online.

4. Better customer service from online vendors.

5. Nearly infinitely better convenience shopping from home than getting in the car and driving to a B&M.

And you can go on, of course. In the end, the assertion that the collection of sales tax at the POS makes the slightest difference is asinine. Looking at it from a total cost perspective, purchase price + tax, it's still way cheaper to buy online - ergo, there will be no difference in the preference to buy online vs. going to a B&M store if online vendors are required to collect a tax at the POS. People will still save lots of money online, therefore they will still shop online...and continue to enjoy all the other benefits of online shopping as noted above as well.

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