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Your local store has to collect sales tax. Unless you live in a select few states, Amazon does not. That gives Amazon and other online retailers a price advantage of several percent over brick and mortar stores and deprives state and local governments of $11 billion in revenue every year that could be going to funding things like education and transit. The Senate is debating an answer to this, the Marketplace Fairness Act, which would require online retailers with sales over $1 million a year to collect and pass on sales taxes.

The Wall Street Journal and other opponents of the bill argue that it's too complicated for online retailers to have to apply thousands of different tax laws; the bill already addresses such concerns, though:

The states would first have to pay for software that makes collection easier. States and localities would also need to simplify their tax system to make things easier for retailers—they’d have to have a single tax agency, a single tax return, and a single audit before they could require online retailers to collect.
In addition to increasing state and local revenue and leveling the playing field for brick and mortar retailers, the Center on Budget and Policy Priorities' Michael Mazerov points out another way that taxing large online retailers would be a progressive move:
Even apart from the Internet sales tax issue, poorer families pay a larger share of their income in sales taxes than better-off families do because they have to spend almost everything they earn. Tax-free Internet shopping compounds the problem: many low-income families would love to shop online to avoid sales tax but can’t because they don’t own a computer or can’t afford high-speed Internet access.
Many also don't have the credit cards or bank accounts required to order goods online.

Amazon has actually come around to supporting the law, since as things currently stand it has to deal with a patchwork approach across multiple states. EBay is pushing for a much higher sales threshold before businesses are required to collect taxes. The Senate, which begins voting on this bill Monday afternoon, previously passed a similar bill as an amendment on a bipartisan vote; the Republican House is less likely to support it.

(Via Travis Waldron)

Originally posted to Laura Clawson on Mon Apr 22, 2013 at 01:25 PM PDT.

Also republished by Daily Kos.

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