Tax Wars: Online v. Brick-and-Mortar Retailers

July 18, 2011 -

A war is brewing in California (and beyond) between traditional retail and online retailers on sales tax. For years politicians said they would not tax the internet, but a recent change in laws has made it so that Amazon.com has to collect sales tax from any affiliate doing business in the state. While traditional brick-and-mortar retailers applauded this change (they see it as leveling an uneven playing field) online retailers are, to turn a phrase, pissed off. Among other efforts, Amazon.com is seeking to rally anti-tax Americans by proposing a voter referendum in California to overturn the new state law.

Retailers, using the power of lobbyists in D.C. are on the other side of the issue and include such heavyweights as Wal-Mart, Sears and national organizations such as the National Retail Federation. Because of their lobbying efforts and deep local, state, and federal connections with politicians, they have the support of states, which sees taxing online sales as a new ways to gain much-needed revenues.

"Congress has to take action," Neal Osten of the National Conference of State Legislatures, tells Politico. "..this is $23 billion that the federal government can give to the states."

Meanwhile, Sen. Dick Durbin (D-Ill.) is expected to introduce a bipartisan bill in the next few months called the "Mainstreet Fairness Act," that would allow states to require online retailers to collect sales tax if states agree to standardize those taxes.

Politico claims that Durbin has held off on introducing the bill because he wants to line up support for it. But Durbin will probably find himself caught in the crossfire of lobbying efforts from both sides of the issue.

Online resellers such as eBay and the Electronic Retailing Association are stepping up efforts by hiring lobbyists firm Mehlman Vogel Castagnetti, led by Bruce Mehlman - a former assistant commerce secretary for technology policy in the George W. Bush administration. The firm recently added Brian Wild, a former senior adviser to House Speaker John Boehner (R-Ohio), to lobby on this issue. It has also added ML Strategies. Amazon has hired Cauthen Forbes & Williams, the Bockorny Group, and TwinLogic Strategies.

"Congress is not anxious to run in and do this," points out Steve DelBianco, executive director at NetChoice, a group that represents numerous online retailers and resellers. "If Congress were to grant states this authority to force retailers to pay sales tax, consumers will feel it like a tax increase and Congress will be scratching its head saying, 'What do we get out of it?'"

On the other side of the issue is the Streamline Sales Tax Governing Board, a group that represents 23 states. They have hired Clark Lytle & Geduldig. Sears has hired OB-C Group. The International Council of Shopping Centers is also lobbying for Congress to step in.

"We’ve talked to lawmakers who want to support Sen. Durbin’s bill," David French, senior vice president of government relations at the National Retail Federation, tells Politico. "What has played out in the states has heightened interest in sales tax fairness."

While a showdown may be brewing in our nation's capitol on this issue, Amazon also want to put the issue in the hands of voters by proposing a referendum voters could have a say in. The company is also battling a similar law in New York in the courts. The company is doing what it can to combat new laws in Illinois and California, and in Texas it has proposed that it invests in warehouses and distribution centers in the state if it is allowed to operate for four more years without having to worry about collecting sales tax.

Obviously online sales tax collection is a murky issue and one that can be dangerous for politicians - particularly on the national stage - to get involved with. Opponents of state and federal proposals to collect sales tax online will no doubt say that what they are doing is tantamount to raising taxes on every day consumers..

Read the entire Politico report here.

Posted in

Comments

Re: Tax Wars: Online v. Brick-and-Mortar Retailers

I really don't see how it's an uneven playing field. At least not in terms of pricing. I mean sure, you don't have to pay tax online, but most of the time you pay shipping, which can oftentimes cost as much or even more than what you would pay in taxes.

I guess everyone needs something to bitch about.

 

 

"And though we may pledge fanboy allegiances to different flags, deep down inside we all serve one master, one king. And his name... is GAMING! FOREVER MAY HE REIGN!"

http://www.examiner.com/video-games-in-atlanta/mike-chrysler

Re: Tax Wars: Online v. Brick-and-Mortar Retailers

I think this whole debate is showing that our tax structure needs some kind of rethinking.

 
Forgot your password?
Username :
Password :

Shout box

You're not permitted to post shouts.
MaskedPixelanteNah, I'm fine purple monkey dishwasher.07/28/2014 - 4:05pm
Sleaker@MP - I hope you didn't suffer a loss of your mental faculties attempting that.07/28/2014 - 3:48pm
MaskedPixelanteOK, so my brief research looking at GameFAQs forums (protip, don't do that if you wish to keep your sanity intact.), the 3DS doesn't have the power to run anything more powerful than the NES/GBC/GG AND run the 3DS system in the background.07/28/2014 - 11:01am
ZenMatthew, the 3DS already has GBA games in the form of the ambassador tittles. And I an just as curious about them not releasing them on there like they did the NES ones. I do like them on the Wii U as well, but seems weird. And where are the N64 games?07/28/2014 - 10:40am
james_fudgeNo. They already cut the price. Unless they release a new version that has a higher price point.07/28/2014 - 10:19am
E. Zachary KnightMatthew, It most likely is. The question is whether Nintendo wants to do it.07/28/2014 - 10:12am
Matthew WilsonI am sure the 3ds im more then powerful enough to emulate a GBA game.07/28/2014 - 9:54am
Sleaker@IanC - while the processor is effectively the same or very similar, the issue is how they setup the peripheral hardware. It would probably require creating some kind of emulation for the 3DS to handle interfacing with the audio and input methods for GBA07/28/2014 - 9:30am
Sleaker@EZK - hmmm, that makes sense. I could have sworn I had played GB/GBC games on it too though (emud of course)07/28/2014 - 9:23am
E. Zachary KnightSleaker, the DS has a built in GBA chipset in the system. That is why it played GBA games. The GBA had a seperate chipset for GB and GBColor games. The DS did not have that GB/GBC chipset and that is why the DS could not play GB and GBC games.07/28/2014 - 7:25am
IanCI dont think Nintendo ever gave reason why GBA games a reason why GBA games aren't on the 3DS eshop. The 3DS uses chips that are backwards compatable with the GBA ob GBA processor, after all.07/28/2014 - 6:46am
Sleakerhmmm that's odd I could play GBA games natively in my original DS.07/28/2014 - 1:39am
Matthew Wilsonbasically "we do not want to put these games on a system more then 10 people own" just joking07/27/2014 - 8:13pm
MaskedPixelanteSomething, something, the 3DS can't properly emulate GBA games and it was a massive struggle to get the ambassador games running properly.07/27/2014 - 8:06pm
Andrew EisenIdeally, you'd be able to play such games on either platform but until that time, I think Nintendo's using the exclusivity in an attempt to further drive Wii U sales.07/27/2014 - 7:21pm
Matthew WilsonI am kind of surprised games like battle network are not out on the 3ds.07/27/2014 - 7:01pm
Andrew EisenWell, Mega Man 1 - 4, X and X2 are already on there and the first Battle Network is due out July 31st.07/27/2014 - 6:16pm
MaskedPixelanteDid Capcom ever give us a timeline for when they planned on putting the Megaman stuff on Wii U?07/27/2014 - 2:23pm
MaskedPixelanteIf by "distance themselves from Google Plus" you mean "forcing Google Plus integration in everything", then yes, they are distancing themselves from Google Plus.07/26/2014 - 12:20pm
MechaTama31I wish they would distance G+ from the Play Store, so I could leave reviews and comments again.07/26/2014 - 11:03am
 

Be Heard - Contact Your Politician