The 2011 co-called e-commerce volume at approx. $3.5 trillion. The volume of e-commerce is expected to increase and state and local governments are concerned because collection of sales tax on these transactions is difficut to enforce. Under current law, states cannot reach beyond their borders and compel out-of-state Internet vendors (those without nexus in the buyer¿s state) to collect the use tax owed by state residents and businesses. The Supreme Court ruled that requiring remote vendors to collect the use tax would pose an undue burden on interstate commerce. Estimates put this lost tax revenue at approx. $8.6 billion. This report discusses the Streamlined Sales and use Tax Agree. and related economic issues. Illus. This is a print on demand report.
This text provides a constitutional analysis of 'Amazon' laws and taxation of Internet sales; state taxation of Internet transactions; and testimony on the hearing on the constitutional limitations on states' authority to collect sales taxes in E-commerce.
[Enter Abstract Body]In the wake of South Dakota v. Wayfair et al. some commentators are calling for an Internet Sales Tax (IST) to “close the tax loophole” and “level the playing field” between internet sellers and local retail stores. This view is fatally flawed and based on a number of fundamental misconceptions about both modern retail and basic economics. First, the proposed IST is not a tax on “internet” retail sales, but rather a tax on remote small and micro enterprises that are already struggling to compete in a retail environment dominated by national retail chains, such as Amazon, Walmart, Target, or Home Depot. These mega retailers combine the use of state-of-the-art logistics and internet-enabled processes with local presence, and as such are already subject to sales tax liabilities. Second, the IST, if enacted, would be a discriminatory tariff on remote retailers, who would face significant compliance costs without reaping any benefits of being local, and without incurring any costs for local municipalities through their presence. Third, we deflate popular myths floated by the pro-IST coalition of local governments and local retail interests, including the flawed arguments that remote out-of-state retailers (i) are dominating the retail space; (ii) are responsible for the decline of family-owned brick-and-mortar retail stores, and (iii) deprive states and municipalities of billions of much-needed tax dollars. Finally, we provide an economic rationale for the simple truth that IST, if implemented, would harm, not help, the U.S. economy in the short- and long-term. We conclude that the current tax system is working as it should: businesses with a local presence and capabilities-imposing local costs, reaping local benefits, and reaching local consumers - are getting taxed as they should. Imposing such costs on remote retailers would be discriminatory and harmful for the U.S. economy.
