Amazon's Crusade Against Sales Tax Clears a Hurdle

Why aren't states managing to succeed in levying sales tax on Internet transactions? A 1992 Supreme Court ruling -- on mail-order sales, made prior to the Internet's proliferation -- remains a big obstacle to the states. But some have gone ahead anyway and attempted to require sales tax. That doesn't please online retailers, and the big ones are fighting hard to prevent the increase. In particular, Amazon has been pushing for repeal of a California law requiring sales tax on online purchases.

The Internet retailer's recent effort is making progress. James Nash at Bloomberg reports:

Amazon.com Inc. the world's largest Internet retailer, can begin gathering signatures for a ballot measure to repeal a new California law that requires it to collect sales taxes, the state attorney general ruled.

The Seattle-based retailer has fought attempts by New York, Texas, Rhode Island and North Carolina to force it to collect sales taxes on purchases, saying the moves infringe on the federal government's power to regulate commerce among states.

So ultimately, Amazon might get a repeal vote. Considering that you'll mostly see passionate online shoppers interested in such a vote, a ballot repeal could end up working.

But when thinking about the bigger picture, does the measure really make sense? Why, in theory, should Internet sales be exempt from sales tax of others aren't. At this point, the technological difficulties are minimal, so there's really no credible rationale.

Obviously, no one likes to pay taxes. But the tax system should strive for uniformity and sensible rules. Why penalize a local shoe store by forcing it to pay sales tax when a consumer can buy the same shoes on Amazon and escape the tax?

Read the full story at Bloomberg. And read more analysis on the Internet sales tax fight here and here.