Retail sales taxation became vogue among the states of the union during the Great Depression. When other revenue sources dried up, many states decided to nab potential taxpayers at each transaction.
We’re in a depression again, and numerous legislatures are looking to expand their retail sales tax base by targeting out-of-state Internet purchases.
California has made the biggest stink about this, and its fight with Amazon.com has been in the headlines for some time. Though the issue has been put “on hold” for a year, the Assembly’s rapacity has produced at least one effect. It has driven many online businesses out of the state, and severely curtailed the online sales of many California brick-and-mortar concerns.
Take Shopobot, a new online business. One of this San Francisco company’s biggest revenue streams was Amazon. And Amazon dropped it like a hot rock.
So what did Shopobot do? It fled California for the cooler Seattle, Washington.
Why skip Oregon — which lacks a retail sales tax? My guess is that Oregon’s political environment struck the Shopobot folks as nearly as crazy as California’s, so heading further north made more sense, to sit beside Amazon itself, and across Lake Union from Adobe’s compound, er, “campus.”
The online sales tax question is widely perceived as a problem. The only solution, I guess, is to let Congress do its constitutional duty and “regulate interstate commerce.”
Amazon sure wants that.
But why am I not optimistic about a good solution?
This is Common Sense. I’m Paul Jacob.