The majority of news reports focus on how the economy has been a drain on states’ budgets, so states are now looking for ways to obtain all possible revenues.  This has led to numerous state legislatures considering how to collect sales tax from online retailers.  Especially when there are reports of people spending around $900 million dollars a day around the holidays online, ultimately totaling close to $25 billion last year.  The news stories are full of arguments on both sides, with many state representatives contending that local brick-and-mortar stores are at a disadvantage because they are still required to pay the tax, causing them to have higher prices than online retailers.    

An issue highlighted throughout the reports are the various obstacles in implementing an online retail tax.  One report focused on the fact that consumers are not doing their “duty” by reporting tax purchases, and that states have difficulty trying to enforce this “duty.”  Some states have advocated having a tax code that is uniform with other states so that Internet retailers have less of an excuse when it comes to collection.  But some go even further, and believe that the federal government would be best suited for this job.  They could create a federal online retail tax that would be more comprehensive and fair.    

Brian Murphy, Are You Breaking the Law When Purchasing Online Products?, Mar. 10, 2010,,

Internet Retailer-Strategies For Web-Based Retailing, Online retail sales set a single day-record by topping $900 million, Dec. 21, 2009,

Anne Broache, Tax Free Internet Shopping Days Could be Numbered, Apr. 15, 2008, CNET,

Amazon Tax Related

The Amazon Tax has stoked a bitter debate that is recognizable throughout news reports.  On one hand, there are state representatives that say this is necessary, and that the states are being unreasonably deprived of revenue.  Likewise, they feel an unfair competitive advantage is being conferred upon online retailers at the expense of local brick-and-mortar stores. 

But opponents of the tax believe this is the absolute wrong answer to states' budgetary problems.  Many reports note that it is not clear how much tax revenue this would actually bring into the states.  What is clear though, is that Amazon is cutting ties with affiliates throughout the state, immediately depriving those individuals of a source of revenue.  Further, opponents allege that the law does not understand the role of these affiliates.  They are not marketing to only those instate, rather these are Web sites that are advertising to everyone on the Web.  Their actual connection to the state is minimal, and the state provides no real services to them, or

In addition, opponents have made clear in reports that this is a protectionist move on the part of state representatives.  Those who operate local brick-and-mortar stores in their districts are a significant voting block.  Some of the larger companies also contribute a great deal financially.  Regardless of the motives, in all the reports, it is always state representatives that are proponents of the tax.  In none of the reports were actual brick-and-mortar store owners quoted.  Thus, its not entirely clear who benefits the most from these new taxes.

Editorial: Save The, The Washington Times, Mar. 16, 2010,

Declan McCullagh, Battle Lines Redrawn in Web Sales Tax War, Mar. 9, 2010, CBS News,

Martin Kaste, States Square Against Amazon Over Sales Tax, Mar. 9, 2010, Boston NPR,

Declan McCullagh, More States Propose Internet Sales Tax, Mar. 8, 2010, CNET,

MG Siegler, Amazon Associates To Pull Out Of North Carolina Due To "Unconstitutional Tax Collection Scheme," TechCrunch, June 17, 2009,