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Bill in US Senate to make Amazon pay sales taxes

As someone who believes that online retailers like Amazon should collect sales taxes and who believes that federal action will be needed to make that happen, I’m glad to see this.

Senate Majority Whip Dick Durbin (D-Ill.) says he plans to introduce a bill, called the Main Street Fairness Act, mandating that all businesses collect the sales tax in the state where the consumer resides.

Such measures have been proposed and disregarded by Congress for years, but Durbin believes the winds are shifting. “This idea is overdue,” he says. “Online retail sales are now very fulsome and are growing at the expense of local units of government.” Many state budgets are bleeding red, despite some recent revenue upswings around the country, and Internet sales-tax revenue has the gleam of found money. In many states, customers are supposed to declare their online purchases on their income tax forms but rarely do. A University of Tennessee study recently estimated that states will collectively lose $10.1 billion in uncollected online sales-tax revenue this year and $11.3 billion next year.

Amazon executives have long argued that state laws requiring it to collect sales tax violate Supreme Court rulings from 1967 and 1992, which stipulate that only retailers with a physical presence, or “nexus,” in a state need do so. Surprisingly, Jeffrey P. Bezos, Amazon’s founder and chief executive officer, recently told Consumer Reports that he supports federal legislation that rationalizes the patchwork of 30,000 state and local sales-tax jurisdictions around the country, each with its own rules and administrative quirks. Amazon declined to comment on Durbin’s proposed bill.

Amazon’s actions on the state level have spoken much louder than its words in support of a national solution. The company has fought state-by-state collection efforts, deploying both carrot and stick to hit politicians where they feel it most—jobs. In Texas, when the legislature passed a bill that would force online retailers with distribution facilities in the state to collect sales tax, Amazon announced it would close its shipping center outside Dallas, fire hundreds of local workers, and scrap plans to build other facilities in the state. On May 30, Texas Governor Rick Perry vetoed the bill.

As it happens, that provision could be included in one of the fiscal bills that will get passed during the special session. If the statewide smoking ban can get a second chance, anything is possible. Having said that, I think there’s a greater chance that I’ll be named Amazon CEO tomorrow than either Congressional chamber passes Sen. Durbin’s bill. I’m glad to see him introduce it, but we’re a thousand miles minus one step from it happening. Thanks to Dwight for the link.

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3 Comments

  1. Ross says:

    The SC cases would be moot, I think, if Federal legislation was passed on the topic. I would make it easy, and only require that the seller collect and remit the state sales taxes, not the local. That eliminates the difficulty of maintaining thousands of different agencies, plus figuring out which taxes apply to a given address.

  2. Daniel says:

    It is great to see the US Senate take up such an important issue. It is time to take this action so that online only retailers and big corporations like Amazon can’t go from state to state and bully the legislatures into giving them the special breaks and advantages that their competitors don’t.

  3. [...] pay up. I’ll say again, I don’t know how long it will take, but I firmly believe that federal action to require online retailers to pay local sales taxes is the endgame. I just wonder how much Amazon [...]

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