Say Valley residents buy $50,000 worth of clothes, office supplies, home accessories and such each day from Internet firms such as Wayfair, small independents either directly from the sites or via Amazon, or on other platforms that do not collect sales tax.
They will be saving $4,125 as opposed to buying it directly from Amazon and not a third party or at a brick and mortar location in a Valley shop.
Whether it is legal for states — and therefore local jurisdictions — to force the collection of sales tax by folks like Wayfair and countless independents when they sell items from out-of-state to consumers in the Valley is now being mulled over by the Supreme Court.
Those opposing as well as supporting imposing universal sales tax collection on Internet retail sales frame it as a fairness issue. The opponents say it will unfairly burden the sellers, especially those running Internet retail concerns out of their homes. Supporters say it is unfair to businesses that have to collect the taxes. The State of South Dakota that is behind the case is focused on the intent of sales tax which is to support government services that Wayfair and all of those home-based Internet concerns need to conduct their business as well as provide common services for the general public. Those services run the gamut from police and fire protection to streets, schools, public assistance, courts, and more.
Every day when Valley residents order items from Internet retail sites that do not collect sales tax, they are taking money away from essential government services such as police. If there was a conservative average of $50,000 a day in non-taxed Internet sales for goods being delivered to consumers in Valley towns, during the course of a year Valley towns would lose $182,500 as their share of the basic sales tax and $91,250 in half cent special taxes, like Measure L for roads in Stanislaus County and Measure M in Manteca for public safety.
There are those that say such a universal tax will create an unfair burden on the small guy that would be forced to collect taxes in thousands upon thousands of jurisdictions that have different rates. And while there are programs that can handle such calculations, they say they cost too much at $3,000 a year.
No one is forcing them to sell in that many jurisdictions and if hundreds of thousands of small Internet based firms that aren’t collecting sales tax now were required to do so, the competition to sell them sales tax programs would send the cost of such applications plummeting.
And let’s be honest about the big guys such as Wayfair that can obviously afford to collect a multitude of different sales taxes across endless jurisdictions.
They want to position themselves as Amazon did by clobbering the competition with what is essentially the ability to undersell everyone else that charges sales tax by almost 10 percent.
A few years back the Wall Street Journal surveyed the cost of items in New York City, Dallas and several other cities. Even though Internet concerns such as Amazon did not have the costs of brick and mortar stores, the survey showed the price difference for identical products in the various jurisdictions were amazingly close to the sales tax collected. Amazon could have elected to have even deeper price cuts and still have bigger profit margins than brick and mortar competitors but elected not to. Instead they pursued a pricing strategy that allowed building both market share and generating net income allowing them to bankroll inroads into dozens of fields of commerce.
No one likes paying or collecting taxes. That said it is the price we pay for things such as police and fire protection, sanitation and water systems, streets, schools, and such that we can’t provide individually but we can on a community basis.