Some 300 years ago, Russian monarch Peter the Great had a problem. He wanted to modernize his country and that meant getting men to ditch their beards–a backwards and unclean symbol in his mind. So he did what many leaders do when they want their citizens to change their ways: he instituted a tax.
Taxes are all about changing behavior and the proposed Senate bill enforcing sales taxes online is no different. Peter the Great’s tax was intended to encourage shaving. The Senate effort operates on a similar principle: it seeks to encourage more consumers to shop at brick-and-mortar stores instead of online retailers. The beard tax ultimately failed to change behavior. And it’s not clear that the online sales tax will achieve its behavioral goal either.
The online sales tax effort is not about choosing one industry over the other, its proponents argue. In fact, it seeks to do the opposite: eliminate what some say is an unfair advantage given to online retailers, who have not had to collect state sales taxes for online purchases. It’s not about giving physical retailers more customers, but rather about correcting for an unfair imbalance. That may be true, but the movement is still about changing how consumers behave.
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"Thousands of local businesses are forced to do business at a competitive disadvantage because they have to collect sales and use taxes and remote sellers do not, which in some states can mean a 5 to 10% price advantage,” one of the cosponsors of the bill, Wyoming Sen. Mike Enzi, said in a March floor statement. Eliminate that price advantage and all those local businesses might see more customers.