April 5, 2011

Finding a Way to Build the Tax Wall

Justin Katz

Rhode Island's aristocracy chose to believe in their own power to impose taxes rather than the power of economic incentives, and some don't like the result:

State Rep. Raymond Gallison, D-Bristol, says local businesses are losing revenue that could help the state's financial situation, while the state itself has not generated any new revenue from the law, according to the Chafee administration.

Large online retailers such as Amazon.com and Overstock.com cut ties with local companies and individuals immediately in response to the state law. In effect, the companies absolved themselves of the responsibility of collecting the Rhode Island sales tax, but they also denied local affiliated businesses vital revenue, he says.

Of course, the preferred solution is to turn to state government's big brother to help with the bullying:

Governor Chafee, state Senate President M. Teresa Paiva Weed and House Speaker Gordon D. Fox are urging the state's congressional delegation to pursue national legislation that would require online retailers and other remote sellers to collect state sales taxes.

You'd think they'd learn that increasing taxes is increasing taxes, and consumers and the economy ultimately pay the price. eTailers aren't forcing their sales upon Rhode Islanders, and there are reasons Rhode Islanders turn to them and are willing to delay their gratification to buy goods online.

Elected officials should devote their energy to helping brick-and-mortar companies counteract those reasons rather than seeking to build economic barriers in everybody's way.

Comments, although monitored, are not necessarily representative of the views Anchor Rising's contributors or approved by them. We reserve the right to delete or modify comments for any reason.

The law was set up to give Internet startups a leg up in getting established (I was for it at the time). The idea that Amazon now needs an advantage over mom & pop shops is ridiculous. Of course, if you rightwingers think RI needs less local retailers then keep it up.

Posted by: Russ at April 5, 2011 10:01 AM

Russ-The main reason I shop on Amazon is simply the access to thousands of dealers and their own enormous stock of items.
Most of what I buy isn't all that expensive so the sales tax avoidance isn't the factor that brings me in as a customer.
Amazon has great prices;a wide choice of the same item from the marketplace dealers;free shipping over $25 from Amazon itself(most items);and really outstanding customer service.
This is why scumbag bait and switch,gratuitously rude retailers like Circuit City went under.
Best Buy is no bargain either.
There's a lot more to it than "internet tax".
Same with Ebay,except you have to watch who you're dealing with there.
right away you atrt in with the 'right wing"nonsense.I say that because I'm sure people of all political persuasions like shopping at Amazon.

Posted by: joe bernstein at April 5, 2011 11:34 AM


I think your premise is off. Either you don't believe in any sales taxes at all (which is fine) or every business should be collecting state sales taxes regardless of where the company is located. I think that is all Chafee/Fox/TPW are asking to have done.

Our state wants the sales taxes from all sales in the state, doesn't that makes sense? If it doesn't then that means you're opposed to any sales tax at all, right?

I don't understand why other states will say that they don't care about collecting the sales tax if an item was purchased over the internet.

I wonder if a way around this for the "brick and mortar" would be to put a computer at the checkout and let people order their items over the internet and choose "instant delivery". So I go to Borders, go to their kiosk, select the books I want, pay with my credit card, choose instant delivery and voila, Borders has my books available for me immediately. No shipping available. There, I just bought my books over the internet, so no taxes need to be collected.

What's the difference?

I'm not necessarily advocating for more taxes, I'm just saying that if there's a law requiring a sales tax to be collected, it should be collected in all instances. No one complains when I buy my car in Seekonk and I'm still required to pay the sales tax. (Well, I complain, but no one's really listening)

Posted by: Patrick at April 5, 2011 11:37 AM

"There, I just bought my books over the internet, so no taxes need to be collected."

That's not the way it works. Internet retailers still must collect sales taxes in states where they have a physical presence (we collected only in NY where or offices were located and in NJ where our warehouse and servers were located).

Where that gets a bit confusing is when companies like Amazon use subsidiaries to skirt compliance with the law.

Amazon and other Web retailers are shielded by a 1992 Supreme Court ruling that retailers could be required to collect sales tax only in states where they had some physical presence. Amazon has kept itself off the hook in several states using warehouses owned by subsidiaries.
Posted by: Russ at April 5, 2011 12:51 PM

The Rhode Island taxation sickness is attempting to spread to the rest of the country through progressive authoritarianism. Quarantine is the best solution to keep it from infecting the remaining healthy states.

Posted by: Dan at April 5, 2011 1:47 PM

"Internet retailers still must collect sales taxes in states where they have a physical presence"

That's stupid. You make a sale in a state, it should be subject to sales tax whether it was sold from a physical presence, the internet or the middle of the Pacific Ocean.

Otherwise, why have a physical presence? Immediacy? That's about the only advantage I see, and quite often, the internet businesses are so much cheaper, that I'm willing to wait 3-5 days. Very often, online retailers don't even need to pay for any kind of storage facility, they've worked out deals with the manufacturers to directly ship off the assembly lines. How much cheaper can it get than that??

Posted by: Patrick at April 5, 2011 1:48 PM

Fortunately with a Republican Congress this has ZERO chance of passing.
Keep buying everything you can on the internet and over the borders.
Every dime you keep away from the Smith Hill Mob is doing God's work.

Posted by: Tommy Cranston at April 5, 2011 7:30 PM

You're missing the point. It's about taxation. Instead of addressing expanding and deficit budgets, we keep expanding the tax base. Big government has a voracious appetite and will never be satisfied.

As a shopper on Amazon, I can tell you implementing a sales tax will not provide me enough incentive to shop brick and mortar anymore than I do already.

Posted by: Max Diesel at April 5, 2011 9:52 PM
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