AMZN, EBAY and the coming internet sales tax.

There is a bill making its way through the senate with broad support. Can be as early as this or next week.

"The bill would empower states to require online retailers to collect state and local sales taxes for purchases made over the Internet. The sales taxes would be sent to the states where a shopper lives. "

http://www.cnbc.com/id/100663511


Bad news for internet retailers.

Just for entertainment purposes.. AMZN monthly chart.

Looks ripe for a pullback to low 200s area.

I predict that the bill will pass easily. Too much bipartisan support, Administration support, Brick and Mortar retail lobby is all over this thing. Internet retailers lobby not going to stop them.

There is a bill making its way through the senate with broad support. Can be as early as this or next week.

Too bad that it has no chance of passing the House, and thus no chance of becoming law.

And if it ever did, it would likely be held to be unconstitutional by the USSC as an undue burden on interstate commerce.

In any case, it's not "bad news for internet retailers," it would only be bad for less-than-giant internet retailers, which is why Amazon and Walmart and Home Depot love it and eBay hates it.

Which is why eBay's CEO Donahoe wrote a WSJ op-ed piece against it today, because eBay is mostly a collection of small retailers. What Donahoe neglected to mention is that the Senate bill includes an exemption for outfits with less than $1 mill in gross revenue.

Which exempts maybe 98% of eBay sellers -- but Donahoe wants to exempt 99.9% of eBay sellers. Understandable, Donahoe and eBay are rent-seekers, just like Amazon, Walmart and Home Depot are.

I would prefer that we abide by the Supreme Court decision that said no sales tax need be collected without a significant nexus (read substantial physical business presence) in the collecting state, decades ago. The same principle still applies today, even if the sales methodology is now different. See Quill Corp. v. North Dakota, 504 U.S. 298 (1992.)

They left open the question of how Congress might treat "use" taxes (the user side of sales taxes,) but the problem remains the burden of 9,600 taxing districts, which even if reduced to 10 or 20 or 50 still remains a significant administrative burden.

If such a thing were ever to become law, it would be "bad" to the extent that we would all be taxed more than we already are and small business would bear the cost of acting as the government's tax collector.

There is a bill making its way through the senate with broad support. Can be as early as this or next week.

Too bad that it has no chance of passing the House, and thus no chance of becoming law.

I think it will pass everything. With fits and starts. Every republican state needs money just as much as every democratic state.
And of course all brick and mortar retailers are lobbying the crap out of every congressman to pass it. Which is even more important in the corrupt congress, political demagoguery aside.

Edited by ogm, 23 April 2013 - 08:13 AM.

A rare event, the people for taxation! I don't know why the states don't legalize weed and tax it, like they do tobacco and grog. Who is going to complain if a bunch of stoners have to pay a tad more? Prison costs would go down also, perhaps. There are huge underground economies that fear pot will go corperate (like alcohol did) and they have fought against legalization (eg, Mendicino).

Edited by selecto, 23 April 2013 - 09:33 AM.

I think it will pass everything. With fits and starts. Every republican state needs money just as much as every democratic state.

And of course all brick and mortar retailers are lobbying the crap out of every congressman to pass it.

While financial hell-holes like CA and IL and NY and NJ and MD may need the money much more than other more well-run states, that's no good reason to assume that it'll ever become law. Passing the Senate doesn't mean squat. And it hasn't yet passed the Senate.

And, no, "all" brick and mortar retailers aren't lobbying for this. Very big guys? Yup. Small and medium-sized guys? No way. I suspect that the smaller guys will be much, much louder in toto than the big guys, even though they can't write big checks. There are 100,000 times more non-big guys than big guys.

In any case, you have your opinion and I have mine -- that is, this latest federal attempt at the forced collection of state sales taxes has no chance of becoming law. Even if it did it exempts maybe 98% of all internet retailers, so it's just not a very big deal except insofar as it chips away at national after-tax income, a bad thing for all retailers. As for the big guys, most of them are already collecting sales taxes universally and cutting deals with various states.

I think that your premise that this is "bad news for internet retailers" is incorrect -- it just doesn't matter much either way to anyone.

I'll go with this is bad news "that it's even being brought up in congress". Bad news for everyone really.

If such a bill passes, it will hurt eBay for sure. As it is, between Paypal commission, eBay commission and shipping cost, selling on eBay is not easy. Adding another state tax which can be as high as 10% will be a drag. I have sold over 100 items on eBay because I am always looking for the next magic golf club to beat my fellow golfers with, and so there are always clubs in my garage to get rid of. If the price is right, they always get sold on eBay, which was close to impossible before eBay came along.

I'll go with this is bad news "that it's even being brought up in congress".

Bad news for everyone really.

While it's not a big deal, I totally agree that it's bad news from a general and incremental standpoint. It's never a good thing when anyone talks about extracting more taxes from the economy as a whole.

This is someone's bright idea today. Even if defeated, what will the next "bright" idea be? Probably not likely to be good for anything that makes anyone any money.

If such a bill passes, it will hurt eBay for sure.

Probably 98% of eBay sellers would be exempt -- they don't do 1 mill/yr. It would only affect eBay to the extent that it dents their very large sellers a bit. Donahoe is a bit overwrought in his criticism, but he's right overall -- it's a bad idea.