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Should State Taxes be Applied to Internet Retailers?

Updated on November 19, 2011

Yes or No?

Most people who shop on the Internet a majority of time will say No, because it saves them money by avoiding to pay sales tax, especially small shops. It was in 1992, that the US Supreme Court ruled that a retailer does not have to charge a sales tax for items if they lack a physical presence in the State. This irked most of the States who want to be able to require all online retailers to charge State sales tax. In the US Senate, a new bill to overturn the Supreme Ct. ruling has been going around claiming such a ruling gives online retailers an unfair advantage over those with actual physical presence ( a store, sales personnel or warehouse).

Most persons that shop online either do not know that they owe tax on items bought or know that that State will never, ever know that they bought an item on Ebay from a seller in NYC, even though Ebay is based in California.They know the State has no resources to find John Doe and send a bill that he owes $2.00 in sales tax. About $10 billion goes uncollected in such online taxes each year that could to public services. All of the big-box retailers online, like, Amazon, Ebay, Barnes and Noble etc., already collect taxes from nearly every state, it is the small retailers that are the target. Of the bills currently in the US Senate, small retailers earning less than $500,000 would not be required to collect taxes.

That seems fair. Most two-bit sellers on Ebay or wherever, do not earn that selling online on a an annual basis. However, studies show that sales tax due on all consumer Internet commerce is only 0.5% of total state and local tax is collected

It is no surprise that all of the big-box online retailers support the overturning of the current law because they already have to pay State taxes and it will hurt the small retailers. If the same item is at Amazon or Ebay as in the small one man online store and both must charge for sales tax, most consumers will buy from the established big-box store.

It just seems safer.


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    • American View profile image

      American View 6 years ago from Plano, Texas

      Anyone who can tell me what tax that gets collected and where it went would be smarter than Creskin the Great. Facts are the majority of taxes collected go into the general revenue fund for distribution. As properly stated, currently any person who sells a product to a buyer within their state must collect the sales tax. Where the grey area exists is if I have an Ebay store, I live in Texas, I sell something to a buyer in California, The government wants to collect taxes because Ebay is in California even though I am not. Despite that, Government does want to see a tax on all internet purchases. It is true, it would be a source of revenue but there is another reason that I will not disclose here but believe me, the government has a great reason to pass the bill.

    • perrya profile image

      perrya 6 years ago

      well, it is a very gray area.

    • vrajavala profile image

      vrajavala 6 years ago from Port St. Lucie

      People like mr buy online, because it saves time and gas. I think the fallacy of your argument is that taxes collected will be put to use for public services.

      As we have seen, government does nit use tax money very effectively. It is used

      I'n crony capitalism.