Why have lawmakers proposed to initiate a new internet sales tax?
Responding to pressure from states and from organizations, members of the United States Congress are considering passing a federal internet sales tax bill which would force internet companies to pay a sales tax.
Traditional ‘brick and mortar’ retail stores specifically feel that they are at a disadvantage when competing against internet retailers who are not bound by the same tax laws as the ‘brick and mortar’ stores. Though some states have worked on bills which tax online retailers, most states do not as of yet tax purchases made over the internet. Responding from pressures by ‘brick and mortar’ stores, and from individual states who feel that an internet tax would raise state revenues in this difficult economic time, those in Congress have considered passing an internet tax law.
Why does Amazon support the federal internet sales tax bill?
Surprising to many observers has been that Amazon.com, one of the world’s largest online retailers, supports some federal effort to subject internet retailers to taxation. This comes as a particular shock considering Amazon’s opposition to internet sales tax proposals that have arisen in different individual states, including Illinois and Connecticut. Amazon has even stopped conducting business with land based ‘affiliates’ in states mandating an internet sales tax, so as to avoid being subject to those state taxes.
Despite these efforts and the fact that the company could potentially lose business as a result of a tax on online goods, Amazon has consistently supported a federal effort to subject online retailers to an internet sales tax. Representatives of the company claim that Amazon already is subjected to a sales tax in around 50 percent of its total sales across the world, and that sales tax has not adversely affected business. The company also claims that a single internet sales tax policy in the United States would enable Amazon to more effectively sell products in accordance with the law, since the company would not have to deal with the tax policies of each individual state.
What problems could occur if the new internet sales tax proposal became law?
Critics, however, fear that a federal internet sales tax would serve as an undue burden on internet companies. Some argue that small online businesses would be subjected to heavy taxation which could, in turn, stifle the innovation the internet has come to represent. Those opposed to the new tax further contend that the tax subjects these small internet retailers to the same massive tax obligations that large retailers, such as Amazon, are more capable of enduring.
Small companies feel that Amazon’s support of the tax might stem from the belief that Amazon’s small competitors might be forced out of business if a tax was implemented. Companies such as eBay, free-market enthusiasts, and many concerned about the future of the internet have all voiced their concern about what they perceive as a biased and counterproductive internet sales tax.