Congressmen in both parties want you to pay more taxes on your online purchases, and once again, big business is lobbying for bigger government, which would hurt Mom and Pop.
Online sales taxes have been a battlefield for lobbying titans for years, pitting Walmart and the rest of the brick-and-mortar retail lobby against Amazon and other online retailers. But now Amazon has changed its business model and also its lobbying position, joining the rest of the retail giants in calling on Congress to aid states in collecting sales tax from online sales.
Here's the background:
There is no federal sales tax. Almost all states charge sales taxes, and many counties, cities and towns do, too. The U.S. Supreme Court ruled in Quill v. North Dakota in 1992 that states could not collect sales taxes from a business that had no physical presence in the state.
So if a Virginian orders a book online from a bookseller in Ohio, neither state can collect a sales tax. Virginia can't force an Ohio business to calculate, collect and pay sales taxes for every state, county and town where it may have customers. Ohio, in turn, cannot collect sales taxes on a sale to Virginia.
Technically, the Virginia buyer in this case is supposed to pay "use tax" to the Virginia government. But almost no taxpayers even know about the "use tax," and state governments haven't really tried to collect it. As a result, online sales are basically tax-free as long as the seller and the buyer are in different states.
That's one reason Amazon set up shop in Washington State, as opposed to California -- that allows Amazon to sell its goods tax-free to the 98 percent of the U.S. population that lives outside the Evergreen State.
As Amazon grew from an Internet bookstore to a dominant online shopping mall, its brick and mortar competitors found this tax advantage intolerable. For years, lobbyists from Walmart and the rest of the industry have been pushing Congress to pass a bill effectively overturning Quill's requirement that a state can collect sales taxes only from in-state business.
Walmart, for instance, has employed Republican operative Charlie Black as a lobbyist on the issue, according to disclosure forms filed by Black's lobbying firm, Prime Policy Group. Black was an aide to presidents Ronald Reagan and George H. W. Bush plus a campaign adviser to George W. Bush and John McCain.
