Discuss: State Sales Tax on Internet Purchases

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April 19, 2018 at 05:28:06
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Hi all,

This week's poll question is about news that the Supreme Court heard arguments in a case surrounding state sales tax charged on Internet purchases. Discuss here if you think its fair some online sales don't have to pay sales tax, and, if you like, the poll results themselves.

Thanks,
Justin


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#1
April 21, 2018 at 07:54:57
How about this. When you are vacationing and buy something outside your home state, should you pay sales tax to your home state on that purchase? Buying on the internet is much the same thing.

Much of the merchandise bought online is manufactured overseas. Should we be paying sales tax to the country of origin?

The draw of internet purchasing is not avoiding state sales tax. If that were the case then Amazon would not be in the leadership spot for online sales. IMO the draw is the wide array of merchandise offered at competitive prices.

My wife buys from Macy's online all the time. Macy's has a Michigan presence so sales tax is applied. Macy's ships for free and allows free returns on all unwanted merchandise to the local store. That model is working for stores that have adapted to a changing market place. Stores that don't change will eventually fail. Internet sales will continue to grow, even with 100% sales tax applied.

There are two competing groups here. The merchants that feel they are losing business and the States that feel they are losing revenue. There needs to be TWO solutions.


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#2
April 22, 2018 at 01:51:19
I think a major draw of purchasing on the Internet when
it was a new idea was the lack of sales taxes. That ruined
a vast number of people running small businesses and the
people who depended on them, by taking away a small
fraction of their business without providing anything to
compensate. It is too late to save them now.

My opinion is that local sales taxes should have applied
from the beginning. Now it doesn't make much difference.

-- Jeff, in Minneapolis


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#3
April 22, 2018 at 08:21:13
Jeff, the secret to a successful small business is to offer something the consumer can't already find. That might be a price advantage, although that would be unlikely. More likely the small business may offer unique merchandise or services. The unique merchandise can be found on the internet and may be cheaper to boot. The point is this, the internet didn't put those small businesses out of business. Their business model did. Most new businesses are doomed to fail anyway for various reasons.

I mentioned one brick and mortar chain above that is adapting. Another one is Bestbuy. They ere heading toward failure when they started fighting back. Best buy sharpened their prices and entered internet sales more aggressively. Bestbuy is doing better.

I won't deny the lack of sales tax was, and is, a factor but facts show it is not the driving force.

I recently bought 2 wallets off ebay after exhausting all possible local sources for the type of wallet I was looking for. Bought 2 because I used to buy 1 at a time from a local source that has since dried up and I am hedging my bets with a spare.


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#4
April 23, 2018 at 00:45:33
Regional, national, and international chains such as Seven-Eleven
and SuperAmerica were the driving force wiping out long-established
small businesses in the 1970s and 1980s. In the 1990s, Internet sales
became the driving force. The biggest selling point at that time was
lower prices due to the absence of sales tax. Since 2000, the primary
selling point has become the ability to order stuff on a smart phone.

The world headquarters of BestBuy is visible out my window. Until
the trees leaf out in about two days. What they have going for them
is size. It isn't that they are big because they have succeeded; they
succeeded mainly because they are big, which means they caused
many, many stores selling the same kinds of stuff they sell to fail.

Sometimes it really is a zero-sum game.

If, as you suggest, small companies specialize in things that cannot
be obtained from the big ones, it is because those things are not very
profitable. The big companies take the market for all the profitable
items, so small ones don't have a chance anymore.

Businesses that did very well for decades before big box retailers and
the Internet came along failed not because they had a poor business
model but because their business was taken away from them by
bigger businesses, whose main interest is to get even bigger.

It has always been that a high percentage of new businesses fail.
Now it is true that a high percentage of long-established businesses
also fail at a similar rate. For the second time now, after moving
into a new apartment, the nearest grocery store to me has closed,
making it far more difficult to get groceries than it was before.
That is not progress. That is not an improvement. At least I am
glad to see that Susie the checkout gal was able to get a job at the
big grocery a mile and a half to the east, and the shopping cart guy
was able to get a job at the big grocery (same brand) two miles to
the west.

-- Jeff, in Minneapolis


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#5
April 23, 2018 at 06:02:16
Jeff, you make some very good points. The take away is that you change or die. There is still a place for small stores. They are called Boutiques. Small town main streets a cross America have been redeveloped with shops that are original or unique.

I can't feel sorry for the ones that don't survive. BTW, Microcenter is giving Newegg.com a run for their money even though they are brick and mortar. My last build came mostly from Microcenter, even with the tax.


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