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Outside View: Equitable online sales tax needed

Fri., Aug. 25, 2017

The following editorial is from the Walla Walla Union-Bulletin.

President Donald Trump has a point that Amazon and other online retailers should be collecting sales taxes from all of its customers just like stores do on Main Streets across America.

Although, as is too often the case with the president, this issue of tax fairness has become a bit clouded. Trump’s zeal to force Amazon to collect taxes seems more rooted in his disdain for Amazon CEO Jeff Bezos, who also owns the Washington Post, than a crusade for tax equity.

“Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt – many jobs being lost!” Trump tweeted Wednesday morning.

Although, as the New York Times reported, Trump’s assertion that Amazon does not pay taxes is false. The company, in its latest annual report to the Securities and Exchange Commission, said it paid $177 million in income taxes in 2014, $273 million in 2015 and $412 million last year.

Nevertheless, putting personal vendettas aside, the playing field in regard to income taxes is still not level.

More needs to be done to bring equity in tax collections for merchants in Washington state and other states where sales tax is collected. If not, many internet merchants continue to have an 8.9 percent advantage – the sales tax rate in Walla Walla – over brick-and-mortar merchants. (It’s 8.8 percent in Spokane.)

The law now says internet retailers must collect sales tax only in states where they have a physical presence. That has led to a collection of far more sales tax than five years ago, but a great many online sellers find ways around the tax collections.

To be fair, Amazon voluntarily started collecting sales taxes this year on purchases in the last four states – Hawaii, Idaho, Maine and New Mexico – where it had not.

Ultimately, the law is only as good as its enforcement.

A lot of Amazon purchases will still go untaxed. For example, cyber shoppers are not required to pay sales tax when they buy from one of Amazon’s third-party vendors. Amazon says nearly half of the items it sells are from third-party vendors.

“Whatever a state is getting in sales tax from Amazon, it should probably be getting about twice that much,” said Max Behlke, director of budget and tax policy for the National Conference of State Legislatures.

That’s where Congress needs to take action, but it must be done in a way that is reasonable for the mom-and-pop businesses selling online. The president’s feud with Bezos is irrelevant.

The goal needs to be an equitable tax system across the country.