A terrific article in Bloomberg Businessweek offers an insightful analysis of the state of online sales tax and ultimately reaches a surprising conclusion.
The article quotes Senator Dick Durbin,who plans to introduce the Main Street Fairness Act, on why the time is right for this legislation:
“This idea is overdue,” he says. “Online retail sales are now very fulsome and are growing at the expense of local units of government.” Many state budgets are bleeding red, despite some recent revenue upswings around the country . . . A University of Tennessee study recently estimated that states will collectively lose $10.1 billion in uncollected online sales-tax revenue this year and $11.3 billion next year.
But the real meat of the article comes at the end, when they look at what collecting sales tax would mean for Amazon, the largest of the online-only retailers:
Actually, being forced to collect sales tax may not turn out to be so bad for Amazon. Analysts at Wells Fargo Securities (WFC) recently surveyed a range of products and found that even without factoring in sales tax, Amazon’s prices were, on average, 5 to 6 percent lower than Wal-Mart’s and 12 to 13 percent below Target’s. And without having to worry about sales-tax consequences, Amazon will be able to freely add shipping centers near every major city and accelerate its push toward delivering products overnight, or even on the day they’re ordered. (emphasis added)
As our regular readers know, technology has reached the point that collecting sales tax isn’t a burden for online sellers. But it was fascinating to read that Amazon not only wouldn’t be hurt by collecting sales tax, it might even do better.
The entire article is worth a read for its incisive analysis.