Your favorite relative apparently loves online retailers. The proof is Uncle Sam’s sales tax policy — he doesn’t require internet businesses to collect any! That’s right. Not one single penny.
Why is the government keeping its mitts off of cyber sellers? Most of the reluctance is an outgrowth of the 1992 decision handed down in Quill v. North Dakota. Here’s what the Supreme Court ruled — Retailers are exempt from collecting sales taxes in states where they have no physical presence, such as a store, office, or warehouse. Naturally, online retailers graciously have included themselves in this illustrious group of exemptees.
The no-tax policy might have worked in the last century. But it seems way out of step with contemporary realities. Internet sales are soaring. So are the potential tax revenues. And who more than Uncle Sam could use a budget-balancing infusion of cash? The solution is simple — require online retailers to collect sales taxes. Seems to work just fine with businesses in the ‘real’ world, right? Why not on the net? An online sales tax effectively would level the playing field and eliminate the following two inequities:
• Online companies currently enjoy a 4% to 9 % price advantage over local retailers. A gap like this is a veritable Grand Canyon when it comes to attracting customers.
• The no sales tax policy drastically reduces revenue for schools, police, and other public services. With internet sales gobbling up a bigger and bigger slice of the retail pie, the losses will be going up, up, up.
Bear in mind, I’m not advocating higher taxes. I simply want to see all businesses pay their fair share so that everyone in the private and public sector gets a fair share.
Amazon.com seems to disagree with my viewpoint. Presently, the online retail behemoth is spending ten of millions to squash California legislation intended to reverse the no sales tax policy. The magnitude of their ‘investment’ provides a clear picture of how much money is on the line.
So what do you think? Should Uncle Sam require online retailers to collect sales taxes? Or is the government’s present policy the way to go. Feel free to fire off your comments below.
And, of course, if you have any questions about this or any marketing topic, be sure to send them our way as well. You can connect with The Young Company team at 949-376-8404 #205 or byoung@youngcompany.com. And be sure to follow us for the latest industry news and tips.