Wednesday, January 6, 2010

Amazon, Internet Sales Tax, and Gratuitous Promotion of Family Members (again)

My father has a piece up at the Oxford University Press blog. The piece discusses a serious discrepancy in how sales tax is administered in the United States. Sales tax is broken down by state. However, companies are not required to add on sales tax themselves unless they have a physical presence in given state. If a company does not have a physical presence in a given state, then customers in that state are expected to pay the sales tax themselves. In practice, almost no customer pays this sales tax. Thus, in practice companies such as Amazon which engage in sales primarily over the internet don't pay any any sales tax on their sales. This gives them a competitive advantage over physical stores. The piece is worth reading. The only issue that I have is that he does not address one issue which is also worth discussing: It may be that such sales tax practices are not only economically unfair but also regressive. If more well-off people are more likely to buy on the internet then they will not pay a sales tax where poorer individuals buying from brick-and-mortar stores will. At this point, internet access and internet use is so common that this may not be an actual problem. However, it is an additional concern with the current system. In any event, his piece is worth reading. Go and read.

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