As previewed previously, one half of the hurdle to enforce a universal online US sales tax has now been crossed, with the Senate voting moments ago to pass a Wal-Mart backed bill 69-27 allowing states to collect taxes on out of state Internet and catalog sales. The bill would end the era of tax-free Internet shopping. During the debate, senators offered examples of consumers who examine products in stores and then shop online to avoid paying sales tax. The pretext? Why fairness of course. “This bill is about fairness,” said Senator Mike Enzi, a Wyoming Republican and co-sponsor of the measure. “It’s about leveling the playing field between the brick-and-mortar and online companies.”
However, while the bill’s success in the Senate was given, its passage in the House appears far more problematic. As Bloomberg reports, “the bill goes to the Republican-controlled House of Representatives, which probably won’t act quickly or pass a measure in the same form as the Senate. Representative Bob Goodlatte, a Virginia Republican and chairman of the Judiciary Committee, has said that while he wants to address the issue, he is concerned it would create complexity for businesses and make them vulnerable to audits by multiple states.”
In other words, the House’s definition of fair appears slightly off from that of the Senate.
It also differs from that of online mega retailer Amazon, which apparently has decided that if it can’t fight them, to at least join them, and make the life of all other online retailers who never lost as much money as it did, or had nearly as horrible operating margins as AMZN, let alone a #Ref! P/E multiple, living hell and if possible crush and bankrupt them by any ways possible just so AMZN could finally lever up its business model of becoming the biggest at any and every price.
The measure, supported by the Obama administration, attracted a coalition of backers including Best Buy Co. (BBY), Amazon.com Inc. (AMZN) and shopping mall owners. Amazon, the largest Internet-based retailer, is expanding into more states to speed delivery, which means it will pay taxes anyway.
And why not: AMZN benefited from a no sales tax policy for decades. Now that it believes it is large enough and has enough scale (if no actual profit) it may as well join the dark side.
Luckily, there are those who still believe that handing over even more private sector cash to the government to burn at will is not the best option.
Opponents maintained that the bill would unfairly burden small businesses with paperwork and audits, create a tax advantage for foreign sellers and potentially allow state-level transaction taxes. Detractors included anti-tax groups, direct marketers and senators from states without sales taxes.
“I fear that what we’re going to do is crush a lot of those start-ups, a lot of those small businesses,” said Senator Ron Wyden, a Democrat from Oregon, which doesn’t have a sales tax.
Of course you are: that is what Amazon, Best Buy, and Wal Mart are hoping for. And since by passing said bill it merey makes government even bigger, one can bet their bottom untaxed dollar, that it is only a matter of time before the House also passes a version of the bill.
Remember: it’s only fair.