If you, a Californian, head to your local Walmart for a 22-inch LCD TV, you'll pay $214. How much for the same TV at Amazon.com? $194. That's thanks to Golden State sales tax, a fee which Amazon.com, as an online retailer outside of California, doesn't require you to pay. That leg-up on brick-and-mortar prices certainly helped the online store's growth. So if they're suddenly, thanks to a new piece of legislation, forced to charge sales tax, will you still shop online?
Right now, whether or not you're charged sales tax on your Amazon.com purchases has to do with whether the online behemoth keeps a distribution center in your state. The laws on the books now insist retailers only need to collect sales tax if they have a physical presence in the state where they've sold goods.
But near the end of this month, a bill, The Main Street Fairness Act, will reach congress. It mandates that all businesses, including online retailers like Amazon.com, collect sales tax for the state in which the customer resides.
Proponents of the bill insist it's just a way to ensure that due sales tax gets paid. You see, when a Californian (or a person in any other sales-tax state) skips out on paying their state sales tax with an Amazon.com purchase, they're expected to declare the purchase, and pay any applicable taxes, on their year-end tax returns. This bill just demands it happens at the point-of-sale.
But Amazon knows the real deal. Most of it's customers aren't paying up their sales tax. And it's this "instant savings" on online purchases that keeps them coming back. Amazon is fighting the legislation.
What do you think? Would you stop shopping online if retailers are forced to start charging sales tax? Or do you shop online for convenience and not for a 7 percent savings? Tell us in the comments!
Business Week via Gizmodo
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I love the fact that I don't pay sales tax in Illinois now. But I also love when it snows, and they plow the streets. We have a pretty brutal sales tax in Chicago, but I'm not going to cry about it or anything. I will always check multiple sites to find the best deal on any given item, just like I always have, and if brick and mortar is cheapest, that's what I'll get.
It's not all about the tax honestly. It's about reliability in available stock and ease of purchase and convenience. Nothing worse than driving down to the local big box only to discover they don't have what you're looking for in stock.
Totally agree with both the detective and jmilb!
Many of the big box stores you can check the website for in-store stock nowadays so that's a convenience.
I'll still shop Amazon, sales tax or no, since I live in a small town without a proper bookstore or music store or kitchen store or...um... anything other than WalMart, actually.
While I love that I do not pay sales tax at Amazon and I will be sorry to see that go, I do not think that will really change my purchasing. I will face sales tax at any brick and mortar stores. Plus, to be honest, while I do not like it, it does seem fair that you should have to pay sales tax
I already buy things online from several companies with distribution centers in my home state, and paying sales tax has not stopped me. For the most part, I use online sales for things that aren't readily available in brick and mortar stores.
My state (NC) already requires payment of use tax for things purchased online from out of state distributors, and they have go so far as to demand Amazon provide a list all sales to customers with NC addresses. The Amazon fought the request with help from the ACLU, on grounds that the state has no business knowing what we're buying, but ultimately Amazon has agreed to provide a list of purchase amounts without items.
I live in Seattle, WA where Amazon is headquartered so I've always paid sales tax when ordering through them. It's not bad. It's still cheaper than most stores.
I stopped buying at Amazon a little over a year ago. Our state (CO) demanded Amazon charge sales tax, so Amazon promptly dropped all their Amazon Associates in our state without any warning. The fact that their 2nd Day Air and Next Day Air shipments arrived at their destination consistently late just helped me to make my decision.
Convenience is much more the draw to online vs bricks and mortar. For the most part, online sales allow you to research, compare and purchase much more effectively than big-box allows. Plus you don't have to deal with the sales people that try and feed you misinformation in order to make up for discounted prices. I went to a Best Buy for the first time in over a year last week and found nothing compelling about being there. The selection was bad and the service was worse.
I won't stop buying because I've generally found that Amazon is more than 7% cheaper so there will still be a savings. Plus they deliver to me instead of me having to go somewhere, find the item, wait in a line, etc.
Even with sales tax, Amazon will still be cheaper than buying locally. I do try to buy locally if I can unless the price difference is so significant or I can't find the item here. Since I live on Maui, the latter occurs more often than not.
Recently I bought a kitchen aid artison mixer from Amazon for $100 less than what I could've purchased it for at Macys, which is the only retailer who carried it here. Our 4+% tax won't really cause a dent there.
Sometimes I can find stuff on Amazon I can't find in a brick-and-mortar store and a lot of times it's cheaper than what I can find here too. And since I have a free trial of Prime, I can skip the shipping for most stuff. But Texas has a pretty steep sales tax, and I won't lie, it plays a part in larger purchases, such as when we bought our Roomba vacuum.
I mind salestaxes the least. I like amazon's corporate policies more than a lot of their competition, but let's be realistic here - the "main street" vendors aren't the beneficiaries.
"Main street" types will have a hard time expanding into e-commerce with barriers like that. I hope that the onvent of things like Square help level that playing field somewhat. Until then, it's a gift to the big box boys.
Living in Connecticut, I am supposed to pay taxes on my online purchases anyhow. I do let me accountant know about large purchases on-line when filing taxes.
Personally, I'd rather have Amazon handle it and have all the other people in my state that do not claim their purchases pay their share, as well.
If you live in a state that does not require you pay taxes on on-line purchases, well, that sucks...
VJ is right on here. As usual, the piece of legislation is given a deceptive name that doesn't really cover what it does. Main Street fairness? No. Main Street mom-n-pops struggle to compete because they simply can't deal in the volume (=lower prices) and convenience of an online giant like Amazon. This is about leveling the playing field for the big brick and mortar retailers who couldn't get away with saying "we don't have a business presence in the state!"
I guess I should also say that I am generally in favor of having to pay sales tax, but I worry about the impact the law will have on businesses beyond Amazon.
I can understand the states' point of view on taxes, but that law sounds terrible for all the smaller internet businesses out there. Amazon can afford to pay a department to figure out what taxes apply and how to send them in to the respective states and towns. Small independent businesses can not.
While it won't stop me from shopping, often the cost of sales tax and the cost of shipping on Amazon are about the same. If the cost of an item isn't less than an in-store item, I WON'T be buying online. I think that this is another one of those silly ideas that business are coming up with to 'save the industry'. Frankly, business has radically changed with the internet and we can't put the genie back in the bottle! That doesn't mean with a slight shift a business can't make as much money as it ever did, maybe more with a few tweaks using the new technology. Items like e-books, the publishing industry shouldn't sell them, they should give them away. Why, because most e-readers connect to the internet. Put a static ad on the first page of every chapter. All the ads can be updated every time the device connects to the internet and all ads can be relevant to the reader's taste. They'll make just as much money, maybe more without ever charging the customer. Don't think it will work? Look at the non-cable TV stations. How much money did 'Friends' make per episode through ads? Will every book make that kind of money? No. But most shows don't either. However, a small shift like that will allow the publishing industry to concentrate on more books and less pirating. There isn't a magic bullet for every type of business nor is there always an easy answer but all I can say is, Buggywhips. At one time, buggywhips were needed to travel with horses. I don't know many people who own buggywhips anymore and none of them who might own them use them. Now they're a novelty of a by-gone time. Charging sales tax won't save buggywhips, er, brick and mortar stores. Sorry.
Also, what does the law say about files? Is tax being charged on e-books and music downloads? Does anyone know?
its only $194 if you are not paying for shipping. i can only assume if you do not get free shipping on it, it would bump the price higher then best buy, and it takes longer to get the item.
how about just get rid of sales tax all together. it doesnt make sense that we should pay a tax to buy something. why does the government get to double and triple dip into every dime we make.... unless of course your rich, and can afford to take advantage of loopholes.