A BNET blogger wrote an opinion piece, “The Internet Sales Tax: Will It Help Or Hurt Small Business?” Freelance journalist Mark Henricks presented most of the arguments for and against in 2011.
As a result of Amazon.com’s political war chest, he concludes the Internet sales tax proposal will fail. He’s been proven wrong as Amazon has been forced to negotiate settlements in various states.
From my perspective — even in the Seattle backyard of Amazon.com as a business writer and confidential business-performance consultant — I disagree on principle.
Mr. Henricks mentions these pro arguments:
– By not paying sales taxes, Internet sellers will lose a 5 percent to 10 percent competitive advantage over bricks-and-mortar retailers.
– Taxing authorities will get $11.4 billion in tax revenue for their beleaguered treasuries (University of Tennessee study).
His con arguments:
– Amazon.com and other Internet sellers argue an Internet tax will be unconstitutional – only the feds can regulate interstate commerce.
– An Internet tax will be too complicated because countless taxing entities tax consumers and businesses differently at varying amounts.
– A tax increase will hurt the economy, and is opposed by 63 percent of Americans. He cites a poll by Rasmussen Reports.
As a passionate free-market businessperson, I can cite countless examples of government waste and dysfunction. Therefore, I generally oppose tax increases. And I’m not opposed to Internet commerce. I encourage it.
However, I support an Internet sales tax for these reasons:
- The proposal will help pay for abused infrastructure. Internet consumers cause wear-and-tear on freeways and arterials and exacerbate traffic congestion every time they flock to local businesses to check out products, but then go online to make purchases.
- This means they also increase the cost of fuel for everyone else. Gasoline prices are largely affected by supply and demand.
- As a question of fairness, Internet purchasers unfairly demoralize and cost small-business owners time and money by shopping at those local retailers, but then disingenuously buy online often to save money or to avoid sales taxes.
- Currently, Amazon.com and other online companies might be considered monolithic and hindering a competitive environment. Plus, jobs are at stake at all kinds of mom-and-pops in urban and rural America. And don’t forget about the collapse of the nation’s second-largest retailer, Borders.
- An Internet sales tax is merely a sales-opportunity cost for software and clerical handling — just as brick-and-mortar businesses have sales-opportunity costs in order to collect sales taxes; pay rent; employ workers; and pay an array of state, county, and city business taxes.
- It is a do-able. Our tax-happy politicians can pass a law in Congress allowing such a tax.
- Software is already available for collecting Internet sales taxes.
- My sense is that an Internet sales tax will not be a tax increase. Bricks-and-mortar businesses already have to collect sales taxes while Internet companies like Amazon.com avoid it, with the now-exception of California. This is simply a case of leveling the playing field and a correction of public-policy oversight in the Digital Age.
- The present situation is also unfair to a significant number of consumers — who live in rural areas without good broadband service, and fixed-income senior citizens who aren’t tech-savvy enough to operate a computer, but who pay their share of sales taxes upon consumption.
- I’ve overheard Americans brag about avoiding taxes via making purchases on the Internet after eye-balling products at local stores. It’s especially galling by public employees.
Such a tax should be based on the consumers’ locations.
This is a question of fairness. In the final analysis, an Internet sales tax is the right thing to do.
“Taxes, after all, are dues that we pay for the privileges of membership in an organized society.”
-Franklin D. Roosevelt
Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.
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