That Ugly Online Sales Tax Issue

We’re not lobbyists. And no one on our staff has ever played golf with a Congressman. And so, our opinion is unlikely to change the world of online shopping even a little bit. Having said that, we think it’s important to weigh in on topics like the sales tax debate, and hope that others in our business will do the same. Though it isn’t a new debate, whether sellers who operate on the internet should be required to charge sales tax at checkout when you make a purchase has become a hot button issue in our not so little world.

Instead of railing against tax in any form as we’ve seen others to, we think that tackling this rather divisive issue, when boiled down to it’s essence, is simply a matter of fairness. How our government decides whom, how and when someone pays this tax is rather subjective, and typically skews in favor of “big business.” Though we are not against the companies which have achieved great success (they obviously pump billions into our economy, hire plenty of workers etc…) we also like to see smaller retailers have the same chance to “make it big.”

State lawmakers are at the heart of this big debate. With little consistency, it becomes difficult to understand the policy of ordering from any given location in our country. How does one know if sales tax will be charged on a purchase made online? The answer is…it varies. A lot. The entire law is based on what we think is a rather silly notion that a “physical presence” in a particular state determines whether one can charge you this fee during the checkout process. To make things even more confusing, some states have enacted laws that require the larger sellers to charge tax even when they don’t have a physical business location in a particular state. Confusing? Oh, yes.

The confusion abounds because transparency is practically impossible to achieve. While one fairly large seller we know will collect the tax on orders from 49 states, it’s exception is New Jersey, because it’s physical location is there. Another small retailer we work with regularly doesn’t make you pay sales regardless of where you ship your purchase to. Surely they have a location somewhere, even if it’s in an office in their home, right?

What we would like to see is a simple, across the board way of the government, whether at the state or national level, way to collect (or better, not collect) sales tax from customers when they choose to do their shopping on the internet. Confusing laws delay progress, and in this case they cost the opportunity to pay less for an item (perhaps the biggest driver of the success of shopping from your online connect device) because paying sales tax (or not) can cause folks to give up on a considered purchase or not shop online at all.

We don’t think that’s good for anyone. Just as stores with brick and mortar locations put money into our economy, so too do retailers, who also or only sell on the web. Many hire large numbers of employees to do business, and of course, anyone employed anywhere is already contributing to the well-being of our country by paying income tax.

Yes, sales tax is a means of generating revenue for governments. We build roads, fund schools (poorly, in our opinion), and ostensibly make improvements for our citizens by collecting from our citizens. But the variations among states make knowing who actually charges it is difficult to navigate and ultimately harmful.

In my case, shopping online is just easier than heading out to the store. I’ve spent far more money in that way than at retail locations in my area. And that, by practically any method of measuring, is the way America is moving. We need to make it better, not more difficult. As the owner of a site which encourages web shopping and the ease it affords, we’ll vote for simplicity every time.