Diary

Amazon’s Argument Falls Apart

Federal and state policy is currently treating two sets of players within the same industry differently.  These differences have allowed one set of players to gain a leg up on its competition, in some cases even driving their competition out of business.

I’m talking about the disparity between the methods sales taxes are collected when purchases are made online versus at a brick-and-mortar store on every Main Street in America.  But if I were talking about any other policy, like say the Federal government’s favorable treatment of Solyndra, conservatives would rightfully express outrage that government is picking winners and losers.

Amazon.com, the biggest dog in the online retailer market, has created confusion by co-opting conservative language to position itself as a victim of allegedly greedy politicians who just want to raise taxes on good American businesses to pay for bigger government.  Rather the opposite is true. The true victims are the local businesses who do not have the favorable tax status that Amazon has long enjoyed. Take, for example, Amazon’s response to a recent California law demanding it collect sales taxes at the point of purchase, just like thousands of Main Street retailers are required to do.  It immediately challenged the state legislature and the governor by threatening to spend tens of millions of dollars on a ballot referendum to avoid collecting hundreds of millions in sales taxes.

The result? Amazon sees record revenues with its preferred tax status while small and community-oriented Main Street retailers foot their bill and struggle to stay alive.

But the story Amazon has been telling is fictitious.  And its use of conservative nomenclature to do it has been cynical.  The fact that Amazon relented and has agreed to begin collecting sales taxes in California beginning next year proves it.

The truth is, Amazon’s unfair sales tax exemption has seriously penalized its competition, which is mostly smaller, locally owned retail shops.  It has hurt job creation and economic growth. It has resulted in government superseding market and consumer preferences.  And it has left Main Streets across the country barren.

And as for those so-called liberal politicians who just want to fund their big government programs?  Look again.  They include people like South Carolina Gov. Nikki Haley who said last spring, “And I will tell you regardless of what happens with Amazon, we want them.  I have told them we want you to do business in this state, but we want you to do it on a level playing field.  They got free property, they got tax incentives, and they got plenty of things.  Don’t ask us to give you sales tax relief when we’re not giving it to the book store down the street or we’re not giving it to the other stores on the other side of town, it’s just not a level playing field.”

They also include former-Florida Gov. Jeb Bush who recently counseled Gov. Rick Scott, “It seems to me there has to be a way to tax sales done online in the same way that sales are taxed in brick and mortar establishments. My guess is that there would be hundreds of millions of dollars that then could be used to reduce taxes to fulfill campaign promises.”

Amazon’s argument has fallen apart and its campaign to maintain a government-endorsed unfair advantage over its competition has been exposed.  Other states and the Federal government should stop picking winners and losers and institute sales tax fairness that levels the playing field for small businesses once and for all.