I got an email from "eBay Government Relations" today reminding me that i wanted to blog about this bill currently making its way through the Senate that would force internet companies to collect and pay sales taxes to the applicable local governments.

Somewhat surprisingly, Amazon is in favor of this bill. It's because they are big enough to be a target for local governments already and at this point they've got distribution centers in every state so they already don't qualify for the exemption (that goes back to mail-order catalog days) that said you have to have a physical location in the state to be taxed, so why not make sure your competitors also have to pay taxes?

eBay, on the other hand, is looking at this from the point of view of the millions of "small businesses" (including random dudes selling off their old He-Man figures) that operate through them. The process of understanding what taxes you are supposed to charge and how to get them to the appropriate governments (this isn't just state level; there are some 9,600 tax jurisdictions in the US) is more the average eBay seller is going to be able to cope with. eBay isn't opposing the bill outright, though. They're looking for an exemption for businesses that do less than $10 million in annual out-of-state sales (which, per the eBay email, is what Amazon does in 90 minutes, but what the email doesn't tell you is that the current bill being considered already exempts companies with out-of-state revenues of less than $1 million, and that's a lot of He-Man figures).

Personally, i'm always a little nervous that we check the "I'm sorry, i couldn't hear you." box on our TurboTax form when they ask us if we bought anything over the internet in the past year, so i wouldn't mind if companies started collecting taxes, and clearly local governments could use the funds. Sales taxes are regressive, but as the article i linked to points out, "poorer Americans are less likely to shop online". So i guess i'm in favor of the bill, but i'd prefer maybe a national internet sales tax that funnels the money back to the state & local governments so that the onerous task of keeping track of all the local jurisdictions isn't put on businesses. But i am a big government liberal so that's what you'd expect me to say.

The bill seems to have a good chance of passing. Grover Norquist is opposed, but the bill was proposed by a Republican and it's supported by the National Retail Federation lobbyist group, which represents Wal-Mart and other brick & mortar stores.