The Online Sales Tax Debate

Friday, May 10, 2013

An delivery box. (Flickr user Guillermo Esteves)

Congress is debating whether to change the way sales taxes work for online purchases.  Jodi Schneider, Bloomberg News Congress editor, discusses the bill and who would win and lose. Business owners: What's your take on online sales tax? How would this bill affect your bottom line? Your customers'? Call 212-433-9692 or post your take here.


Jodi Schneider

Comments [38]

The Truth from Becky

Should be no sales tax charges for online shopping.

May. 10 2013 12:23 PM

I am disappointed in this segment as it created more heat than light. You might call it debate but I wouldn't! The initial caller's misperception that this was a new federal tax on the export of state goods and is therefore unconstitutional should have been more clearly explored and explained. Simply unpacking his concerns would have help listeners see that this is not what the new law does.

What are the mechanics of the new law as passed by the Senate? After listening to this segment, I still do not know. That's bad for a BLS segment and indicative of how our media underserves us all yet we put up with it. I guess it's off to so that I can get some facts.
(google S.336 and read it)

May. 10 2013 11:58 AM

Around here it's not Internet sales but the big national chain stores that wipe out local businesses. Local bookstores survevd but not Borders moving in. Local organic produce shops suffered or died when While Foods moved in. Etc. it's not the 'net that's the main threat to local small business. It's the giant corporations.

May. 10 2013 11:36 AM

The reason for this is obvious. After increasing the cost of doing business and the continuous need for "revenue" what a great win-win.
Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
-- Quote by Ronald Reagan, Remarks to the White House Conference on Small Business (August 15, 1986)

May. 10 2013 11:35 AM

I am not opposed to some fairness on this issue between online and physical retailers. However, where is this $20+ billion going to come from? Consumers, that's where and with the economy finally, slowly recovering we have to ask, is this the right time to impose this burden on all of us? Let it ride for a while and let the economy recover. This will cause people to pull back and drag the economy at a time when it needs to be bolstered.

May. 10 2013 11:34 AM
Amy Farges from Who else has 8.25% sales tax ? :)

When you shop online, you typically pay for shipping. Our small business ships perishables - bacon, butter, charcuterie - with chill packs, styrofoam, etc. Who do you think is ultimately paying for the S&H costs? It becomes a choice between 8.25% sales tax and shipping cost.

May. 10 2013 11:32 AM
jgarbuz from Queens

This "tax the offshore" stuff is mostly NONSENSE. People who have business in other countries have to pay taxes to that other country they are based in just like a local business in that country. There are international agreements about subsidiary businesses. But the idea that this country will get a BOOM in tax revenues by going after offshore subsidiaries is sheer fantasy. It's just a strawman. Yes, businesses save some taxes with offshore incorporations in the Bahamas and the Cayman Islands, or wherever ,but we shouldn't get carried away with the fantasy that somehow capturing those taxes will have anything other than a negligible effect on the treasury. It's just a political excuse fed to the masses. It has little basis in reality.

May. 10 2013 11:30 AM
John A

"The Internet is stateless"
Hilarious. Yeah, for the current moment. But there is huge and increasing need for it's own policing, in all forms. Stateless for the moment.

May. 10 2013 11:29 AM

It is a level playing field with physical stores. shipping charges are comparable to sales tax.

May. 10 2013 11:27 AM
Mary from UWS

What about items that we wouldn't pay tax for if we bought it in a brick and mortar store? For instance, in NYC we don't pay tax on clothes or shoe items that are under $110. Will I now have to pay tax if I buy a $70 pair of shoes from Zappos that I wouldn't have to pay tax if I went to DSW on Broadway?

May. 10 2013 11:27 AM
Alfred from NYC

Amazon only collects sales tax in nine (9) states. They DO collect in NY but not in 36 of the 45 states that have a state sales tax. Amazon supports a national sales tax according to this Wikipedia entry.

May. 10 2013 11:27 AM
Dorothy from Manhattan

Amazon charges sales tax in NY b/c they lost the court case. I think Amazon sued NY, but not sure who sued whom.

Paypal could handle sales tax for ebay sellers. Virtually all of them use paypal.

I buy on line partly because the stuff comes to my door -- Amazon has free shipping over $25.

May. 10 2013 11:26 AM
Diana from NJ

Guy wrote to Daily News, recommended flat rate, remit to feds, feds distribute evenly to 50 states. Easier for small businesses and offshore ones?

May. 10 2013 11:26 AM
Sue B

I live in NYC. Regarding Amazon--years ago they didn't collect NYS/NYC sales tax. However, 4 or 5 years ago they started collecting, if the item came from Amazon directly (which is a very large part of their sales). I think this was a result of NYS taking them to court.
When you buy something on Amazon that is from a third party, then you only pay tax if the vendor is in NYS.

May. 10 2013 11:26 AM
Bob from Brooklyn

You know what would really make a difference in taxes and quality of life for consumers? Force these f-ing greedy employers to increase wages for EVERYONE. We give them better productivity, we should get a sustainable quality of life for all.

May. 10 2013 11:26 AM

Use this convenient tool to write your senators & congressman against this tax:

May. 10 2013 11:26 AM
jgarbuz from Queens

A Federal sales tax on ONLINE cross-border sales ONLY, is the easiest and most sensible solution. Q E D.

May. 10 2013 11:25 AM

This will really hurt start-ups. Amazon is already paying sales taxes.
But for a startup T-shirt maker to deal with 11,000 local taxation authorities, is likely be an insurmountable burden.

Unless he's in a foreign jurisdiction.
So this will cause more losses to US jobs.

May. 10 2013 11:22 AM
alfred from NYC

There are many very small businesses who operate without a physical presences and exist because they can sell nationally not just locally. Adding more tax collecting requirements especially on very small businesses will add more complexity and costs of doing business that will ultimately raise the cost of products to consumers. A

s compared to other states NY already makes it hugely complex because it has dozens of jurisdictions all with different rates to be calculated and collected by the business on behalf of the government. Other states have a flat rate for the whole state and the state disperses a % to each jurisdiction instead of putting that burden on the small business.

May. 10 2013 11:22 AM
Andrew from West Village

After going to Paragon to purchase 2 items that both were out of stock I now buy everything online. My UPS guy feels like a family member these days.

May. 10 2013 11:22 AM

Amazon has been charging sales tax in BUS since 2007

May. 10 2013 11:21 AM

only the biggie online stores can offer free shipping so the smaller online retailers will be hurt in that noone will shop there having to pay shipping on top of tax....corporations evade their taxes with political borders all the time... so what if someone doesn't pay tax on a fridge.. go after the big loss.. stop corporate welfare!

May. 10 2013 11:20 AM
Jim B

Ditto hjs; in most instances the cost of shipping offsets the savings in sales tax.

May. 10 2013 11:19 AM
Edward from NJ

While eBay is protesting against this, it's actually a tremendous opportunity for them. It's an entirely new business service that eBay/Paypal is in a prime position to provide.

May. 10 2013 11:18 AM
jgarbuz from Queens

I do most of my shopping online, except for food, because it is difficult to travel, and I don't want to waste my time in stores looking for what I want, talking to idiots, or waiting in front of a cash register. I can and do get almost anything I want online, and do comparative price shopping online as well , so the additional Federal tax, while nobody is happy about paying taxes, nonetheless is offsets my convenience a bit, but is reasonable to save small shopkeepers.

May. 10 2013 11:18 AM
Tom from UWS

- IF you buy from a company that has a presence in your state already, they charge you tax. (That can be selling, warehouse, headquarters ...)

- If you buy online from a company that does NOT have a presence in your state, those sellers are not collecting sales tax.

- ONLINE sellers in the US (Amazon for instance, but most any retailer) have a presence in the US. They have to in order to answer their model of FAST delivery. An offshore seller will still have to deliver the goods, and as they can't match speed or price for shipping, that's not much threat to local business.


May. 10 2013 11:17 AM

i have to pay a shipping charge if i buy online, so its a wash with sales tax. now i will have to pay both.

May. 10 2013 11:17 AM
Tish from NYC

No one wants to pay more for what we buy, but the current system is very unfair in that it puts local bricks and mortar businesses at a huge disadvantage. It's our local retail businesses that employ local people in our community and also add to our communities' vitality and complexity (unless you live in a town with a big Amazon or Ebay facility and if so, I'd anticipate this argument wouldn't hold much for you). Think about this the next time you're lamenting the closing of a neighborhood store where you live, maybe one that you hadn't bought anything in for a while, favoring their online competitor.

The future should encompass both Internet and bricks and mortar retailers. Let them compete on customer service and the quality of the goods they sell, not a sales tax disparity.

May. 10 2013 11:16 AM

Brian...going online to shop and get the best price is tax evasion?

May. 10 2013 11:16 AM
Bob from Brooklyn

WHAAA! I hate taxes! I don't want to pay for bloated defense budgets, political corruption and an evil justice system!! WhAAA!!!

May. 10 2013 11:13 AM
jgarbuz from Queens

A Federal sales tax on cross-border ONLINE sales helps brick and mortar businesses, and some of those Federal revenues might go back to states treated the same as way all other Federal taxes, some of which goes back in the form of programs and state aid.

May. 10 2013 11:13 AM
Sheldon from Brooklyn

I don't like paying any tax but this "amazon" loophole has been unfair to honest "brick and mortar" stores.

May. 10 2013 11:13 AM from NYC

I am totally in favor of taxes being paid to the state that has a sales tax. I had an internet business -- there is a simple piece of software that calculates the sales tax for each zip code. Very simple.

And -- why do should Amazon have the advantage of selling me a book for $10 when B&N online has to charge $10.88? Just because of where warehouses are located?

May. 10 2013 11:11 AM
John A

Why not have the taxes applicable back to the sellers home state only? One form for them to file, since the filing load is the issue, isn't that a solution?
Why not gave the commerce provider (Amazon,EBay) do this for the seller.
And what RUCB said - agree.

May. 10 2013 11:11 AM
jgarbuz from Queens

I agree with the idea of a Federal sales tax, something like a VAT, but that would ONLY apply to online sales to parties over state borders. I think that state and local governments can have their own sales taxes on local sales, but cross state border sales should be subject to a national sales tax where the revenues go to the Federal gov't.

May. 10 2013 11:04 AM
Bob from Brooklyn


May. 10 2013 11:01 AM

@Bob -

Internet sales are already taxed but the consumer rarely pays the tax owed since self-reporting is the usual mechanism for collecting the tax.

A national VAT with the money being sent BACK to the state of residence is a better way to go. This avoids the problem of residents in states with no sales tax and reduces the black market in 'ghost' residences in no tax states. They'd get 100% of their money back.

May. 10 2013 10:31 AM
Bob from Brooklyn

Tax everything, and give the money to people who cannot find work. Keep this wonderful economy of consumption going, d'uh!

May. 10 2013 09:18 AM

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