The people's voice of reason

The Terrible Amazon Tax

As years go by, politicians never cease to stoop lower and lower to scheme up new ways to milk more money from the people and place numerous additional roadblocks into the American economy.

One of the newest targets for government ripoffs, of course, is the internet. Up until now, it has been a bastion of free-market success, where people and corporations, both large and small, have equal opportunities to make the best of a world-wide market.

Anyone who claims to know Constitutional law should understand that states are not allowed to impose tariffs and/or embargoes on goods and/or services brought in from or exported to other states. That is why for all of the decades since our founding, we have not been forced to pay sales taxes on mail-order and internet purchases from without our own state.

The last Supreme Court decision on this matter was in 1992 when the State of North Dakota challenged Quill Corporation to collect sales taxes on items it sold there. The court said, “No.” Since then, a physical presence within a state has been the legal requirement before any sales taxes can be collected, regardless of what names they might be called.

In 2013, with a 69-27 vote, the U.S. Senate passed the unconstitutional “Marketplace Fairness Act” to allow states to impose sales taxes on internet purchases. Fortunately, enough Republicans in the House held it back and refused to let it pass.

But in February, 2014, Governor Bentley announced his support for the act, which has not even become law, and claimed it would generate $150 million of extra annual revenue for the state’s general fund.

Then in October, 2015, Bentley and members of the Alabama Department of Revenue colluded with Amazon to impose an illegal state online sales tax onto all remote retailers who sold more than $250,000 worth of goods here in a year. The companies, in turn, were expected to collect the taxes. The mandate kicked in this past January 1, 2016. Bentley dared any retailer to sue the state.

Some retailers complied. Others did not. Newegg bravely stood up for its rights (and ours) and didn’t pay a nickel. In May, the Alabama Department of Revenue claimed that Newegg owed nearly $155,000 in tax for January and February along with $32,000 in penalties and interest. Bentley got his wish. Newegg filed suit. Newegg has no physical presence in the state, and Quill vs. North Dakota should settle it. Perhaps Alexander Shunnarah can provide Newegg a multi-million dollar settlement—enough so our greedy politicians will never try a dirty trick like this again.

Alabama Revenue Commissioner Julie Magee is not happy. She claims that Quill has been “detrimental” to the state’s revenues.

But while some heroic companies are fighting this unconstitutional legislation tooth and nail, others, particularly Amazon, are supporting it, hence the name, “Amazon Tax.” Although the world’s largest e-retailer claims to be fighting for e-fairness, it knows that it can easily handle the jungle of new regulations and mandates while many of its smaller competitors will, sooner or later, be unable to cope with them and go out of business. Many of the big box stores have already paid lobbyists millions of dollars to support internet sales taxes for the same reason—cut the throats of the small competitors.

Beginning November 1, Amazon and some other large e-retailers will begin adding an 8% sales tax (double the state’s official tax rate of 4%) on all purchases by Alabama customers. We cannot even guess how many others will join Newegg in fighting to stop this racket by suing the state, but if enough stand up, we can protect a free-market internet.

There is absolutely no legitimate justification for an internet tax. The expected revenues are often grossly exaggerated. The costs of implementing and collecting the tax are considerable; a whole new bureaucracy must be staffed and funded, the cost of which could be greater than the revenue produced. Meanwhile the online retailers must undergo increased record keeping and other compliance costs. The argument of “leveling the playing field” does not wash. Even though online shoppers do not pay sales tax, they do have to pay shipping costs, which in most cases exceed the amount of a sales tax. They also have to wait for their purchases to arrive. The reason people shop online, myself included, is that the vast majority of items purchased there are not available on the local markets.

All people are urged to call Governor Bentley and their legislators and comment on their Facebook pages that unless they take strong action to stop this tax, heads will roll in the next election. If you are fed up with this gouging, act now.

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