Will You Still Shop Amazon when they Charge Sales Tax?

Will You Still Shop Amazon when they Charge Sales Tax?

Taryn Williford
Jun 3, 2011

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

(Images: Flickr member HK-DMZ licensed for use under Creative Commons)

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