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  • Taxing Dot Com

       October 17, 2007

    I like Madison's former mayor, Paul Soglin. Sure, I disagree with his liberal politics, but I do appreciate his no nonsense attitude. Today, however, he has got something wrong. Soglin's upset with the House voting to extend the Internet tax moritorium. His spin is that the moritorium punishes small and local retailers:

    So when you order that book from a seller that does not have a nexus to your state, every book dealer in your state is disadvantaged. It means that the Internet purchase you make on eBay not only places your local merchant at a disadvantage, but that you and that merchant have to make up for the billions of dollars in lost sales tax revenues.

    I always thought Soglin was living in the 1960s, but apparently, he's really living in the 1990s - the days when Internet merchants were a bunch of maverick standalones. Now, most huge web sellers are part of a multichannel companies that include catalogs and stores. I looked up the top 25 largest retail web sites (according to Internet Retailer's guide) and found that 20 of them would charge me sales tax on an order. Most major online retailers already charge tax.

    You know who doesn't charge sales tax? The local merchants that the law allegedly puts at a disadvantage. Plenty of enterprising small businessmen and women take online orders from all over the place. If I live in California, I can order sales tax-free from Madison's own Soap Opera, but not if I want to buy something online from Bath & Body Works (part of the 16th biggest web retailer). You could certainly argue that the Internet tax moritorium doesn't result in any "lost" dollars because tax revenue lost from local online shoppers are gained by local online merchants.

    All that said, I kind of agree with Soglin that the law shouldn't have been extended. Why should Mom & Pop businesses get a tax break when Wal-Mart and Target and Staples don't? It's time for big business to fight back!


    Posted by at October 17, 2007 02:30 PM

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