E-commerce Taxation

The debate on whether to collect e-commerce taxes have gone back since the early 90’s and up until now, the decision on whether to do it or not is still being argued. The whole argument stems from the fact that sales tax isn’t collected from online retailers because back in 1992, the Supreme Court had made a decision to prohibit states from collecting taxes from online retailers, the decision being decided because collecting sales tax from every state would be too difficult. And this of course, was unfair to those with brick and mortar businesses, which where the argument starts – what makes online retailing so special that taxes don’t need to be collected?

States are finding loopholes on how to even out the playing field between retailers of physical stores and online because the Unites States is losing an estimated amount of $23 billion a year in uncollected online sales taxes, money that could be used for many things. There is something called the ‘Amazon Law’ that some states are implementing while some states, have yet to jump on board. According to Bloomberg.com, a total of 20 states now have decided to levy an Amazon tax on online goods sold, if you have a physical presence retailer or if you pay marketers to send traffic to your site, you would fall into this category. To put it simply, if you’re an Amazon shopper, depending on which state you live in, you’ll have to pay a sales tax for your purchase now.

On the flip side, the argument of not wanting to collect taxes from online retailers is because it can become a rather large threat to future business. Shoppers will drop their usual spending habits for that reason. And if sales go down, then the company’s stock prices goes down as well.

After doing some research and reading numerous articles of this whole ordeal, I can’t say that I have a set decision on which to do. As a consumer who does do a lot of shopping online, I would rather forgo the collection of taxes but from a business point of view, then I’d support it. Whether having the physical presence or not, retailers should be fair. But if the government were to begin collecting taxes all around, they should do so it in a simple yet reliable method.

Links to read more: 1, 2, 3, 4, 5




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