First, there is no special tax treatment. As the Associated Press pointed out earlier this year, “In many states, shoppers are required to pay unpaid sales taxes when they file state tax returns.” That goes for online purchases as well as out-of-state purchases. The near-impossibility of enforcing existing law does not justify turning online businesses into out-of-state tax collectors. If the retail industry were truly interested in “fairness,” they would be demanding the same collection activity from physical retailers in “tax-free” Delaware.
Second, size does matters. The McGladrey survey found attitudes toward the Internet Sales Tax differ substantially based on size. Accounting Today reported:
“McGladrey polled online retailers with annual revenues between $10 million and $1 billion, and found that only 38 percent of them projected that the MFA would have a negative impact on their profitability. However, the picture changed significantly when comparing projections in the higher versus lower revenue ranges. While 50 percent of executives at companies with annual revenues between $10 million and $50 million projected negative impacts on profit, the number dropped to 22 percent for executives at companies in the $150 million to $1 billion range.”
A 2010 study on the top 20 “E-Trailers” found 15 of those retailers – and yes, this includes Walmart and Apple – paid sales tax in 44 or more states. NPR reported another, Amazon, “is already facing a big tax collection requirement as it develops its next-day-delivery service.”
The fight over the Internet Sales Tax isn’t a Main Street versus Internet Retailer fight; it’s a fight to trample competition and preserve market share. Steve DelBianco, the executive director of NetChoice, which opposes the bill, said this “has never been about helping Main Street, but about helping Big Box stores.”
As Barack Obama’s signature legislative achievement (and presidency) continues to crumble before our eyes, proponents of this tax plan are continuing to work quietly behind the scenes. Conservatives must ensure the tax-schemers do not play the role of the Grinch who stole Christmas.