From Saturday's Barrons...Amazon does not blink...
Do you remember when they used to call the Internet the "information superhighway"?
That was so 1995. A couple of bubbles ago. Still, recent events have conjured an eerie blast from the digital past. Mary Meeker was back in the news, as was former Clinton Treasury Secretary and Obama chief economic advisor Larry Summers. And
Amazon.com (ticker AMZN) once again is arguing that its customers shouldn't pay state sales taxes. Haven't we been here before?
Amazon has long contended that requiring it to collect state sales taxes is unconstitutional,
pointing out that the federal government regulates interstate commerce and bars tariffs on trade between the states—unless a company has a physical presence in that state.
On Wednesday, California passed a law that lets Sacramento collect taxes from out-of-state e-commerce sites that do business with in-state Web affiliates, which is to say third-party Websites connected to Amazon.
Barnes & Noble (BKS) and
Wal-Mart (WMT), both of which have substantial e-commerce operations, argue that Amazon and other e-tailers should collect sales taxes simply because they are retailers.
The Internet is a game-changer, they would say, that redefines shipping across state lines. Talk to your local bookstore owner, if you still have one, about the fair-competition argument.
California, which is broke, estimates that it can capture about $200 million a year in sales taxes by closing the "affiliate site" loophole. That's not likely.
Hours after the law was passed, Amazon terminated relationships with its California affiliates. Critics of the proposed law point out that there are some 25,000 Amazon affiliates in California—small businesses that employ people and pay income taxes.
But the real story is this: If Amazon is ever required to collect sales tax from all of its customers, it will lose a key competitive advantage over brick-and-mortar retailers. So, the debate still rages—roughly a decade after it started, and with no end in sight.
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Somewhere, in this situ, the good/right/proper avenue is hiding, imo.
Meanwhile, the broke states, counties, cities and towns will turn over every available rock to raise 'revs'...what where those geniuses doing during the halcyon days of the early 2000 decade? Where did all that dough go?!
