Congress and the State of California are looking at ways to tax online sales. The State Legislature is considering Assembly Bill 153 that would require all online sellers with some physical presence in the state to collect sales tax. In the U.S. House, a Massachusetts Democrat is sponsoring a bill that would require all sales transactions to be treated equally. The bill is called the “Main Street Fairness Act.”
This issue caught my eye since I did a story a few weeks back about the financial health of San Diego bookstores. Both independent stores and the big chains like Borders are seeing brick and mortar operations decline due to the competition of online sales from operations like Amazon.com. Amazon pays no sales tax in California. The brick and mortar stores do.
The Sacramento Bee published pro-con opinion stories on AB 153. You can check them out to learn more. I came away from my story with the view that on-line sellers need to be treated the same as actual stores as a matter of simple fairness. Not only do bookstores have to charge sales taxes, which affect their competitive price, but they also pay property tax. Businesses that support their local communities shouldn’t be punished by letting Amazon get off Scot free.
But look at the Sac Bee piece and make your own decision. Online sales provide a great service and I use them a lot. But maybe it’s time to close their tax loophole.