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Home Publications Blogs Beat the Press George Will is Outraged Because Amazon Will Be Taxed Like a Mom and Pop Grocery Store

George Will is Outraged Because Amazon Will Be Taxed Like a Mom and Pop Grocery Store

Monday, 29 April 2013 04:59

Yes, he is. In his column today he expresses his anger over a bill that would apply the same sales tax to Internet sales that people pay now when they go to their corner store. He scoffs;

"In a burst of the bipartisanship we are told to revere, a coalition of Republican and Democratic senators rose above party differences last week to affirm class solidarity. They moved toward a tax increase of at least $22 billion to benefit the political class at the state and local levels."

Let's see, that political class would be people like Rick Perry, the governor of Texas, and Jerry Brown, the governor of California. The class solidarity here is less than obvious. It's certainly less visible than George Will's class solidarity with rich people, including those who make their money by gaming the tax code instead of doing anything productive, as is the issue here.




The sales tax is regressive. It would be great to see it replaced with income taxes. It's not going to happen whether or not we tax Internet sales. Taxing Internet sales makes the sales tax less regressive because low income people buy less of their stuff on the Internet than high income people. This is simple -- whine away, but the story is really really simple. If you want to make the tax system less regressive and you want to make the economy more efficient (why would we subsidize Internet sales at the expense of brick and mortar stores?), then you support having Internet sales subject to state sales taxes.

Comments (26)Add Comment
Why Isn't George Will Subject to His Own Rules? Three Strikes and You're Out
written by Last Mover, April 29, 2013 6:46
On page 1 of his book, Men at Work, The Craft of Baseball, George Will quotes a baseball player saying even the best batters fail 65% of the time. Will notes there are no .400 hitters in Washington and players in the game of government are spared the remorselessly objective measurement of performance that ball players see in box scores every day.

So when sports stadiums are subsidized to the tune of millions it's all about winners and losers earning pay based on performance.

So when baseball teams divide up revenue to insure winning teams don't drive out losing teams until there's only one team left, it's all about winners and losers earning pay based on performance.

So when corporations are too big to fail or too powerful to fail, it's all about winners and losers earning pay based on performance.

So when labor productivity is systematically stripped of gains redistributed to capital and the 1%, it's all about winners and losers earning pay based on performance.

So when government acts as umpire to make the playing field more level by taxing internet sales, it's all about reducing macro growth incentives by punishing internet winners and rewarding brick and mortar losers with unfair competitive advantage, both of whom earn pay based on performance under no-new-Norquist taxes.

If George Will and the overwhelming private corporate market power he blindly worships through the metaphor of baseball were subject to the competition of real baseball on a real level playing field, both would be eliminated in the first round as the miserable economic losers they are.
Another point from George Will, he's kind of cranky today.
written by Rick Beckley, April 29, 2013 7:04
You left out this awesome quote: One reason the Republican-controlled House should reject this tax increase is that much of the revenue will be passed on to public employees and, through their unions, to Democrats’ campaigns.

I could have sworn I just read another article in the Post about how, while Democrats had so much Federal power, the majority of states were controlled by Republican legislatures and governors. Is this not accurate? Let's see, I live in Tennessee...Republican governor, republican legislature. Yep, republicans here.

I'm not sure exactly how this sales tax revenue is going to be funneled to public employees, are they planning on skimming off the top or something?

Man, George is cranky today.
No one likes sales taxes, but
written by Rick Beckley, April 29, 2013 7:09
While a general internet sales tax would be odious, it'd also be a way to actually level the playing field for brick stores. Of course, it's about ten years too late, but that's lightning speed for Congress.

Even better, it would force brick stores to actually carry inventory to be able to compete. Carrying inventory means ordering inventory, which means manufacturing inventory, which means jobs and labor.

And it's not like this sales tax is some sort of regressive punishment, like the sales tax on food here in Tennessee already is. Virtually all of the purchases made from online stores are voluntary, so the poor are not being punished. Finally a good tax idea, unlike the reprehensible carbon taxes that are proposed to be financed from the pump and are directly regressive.
What's a George will ?
written by Paine, April 29, 2013 9:08
I wonder how will might talk after some dear soul
punched him in the nose ?

The humorless Jeeves act might turn to "blatant abjections"
written by AlanInAz, April 29, 2013 9:09
It is ironic that Amazon is a supporter of the internet tax bill. In my state of AZ as well as others such as CA and TX taxes are already collected by Amazon. The bill will give Amazon a competitive advantage against smaller online retailers that will find it more difficult to collect taxes for 50 states with vary reporting requirements.
written by skeptonomist, April 29, 2013 9:32
Collecting sales taxes benefits not so much the "political class" but rich people in general. The more state revenue that can be obtained from taxing nickel-and-dime transactions, the less need there is for income taxes, which are the kind of taxes that Republicans really hate. Will understands the class implications of sales taxes and is fairly upfront about it: "One reason the Republican-controlled House should reject this tax increase is that much of the revenue will be passed on to public employees...".

Would getting contributions from Amazon executives and other big internet firms outweigh the electoral benefits of pleasing actual small (and large) businesspeople who run brick-and-mortar retail stores? The pluses and minuses of enforcing sales taxes make for a difficult political calculation, and Grover Norquist's supposed doctrinal opposition to all taxes will count for little in how Republicans come down on this.
Amazon's support for Internet taxes
written by Dean, April 29, 2013 10:30
AlanIN Az,

Amazon has just recent come around because they had been losing the battle. Several states, including NY and CA, have been successful in forcing them to collect taxes based on the argument that their affiliates give them a presence in the state. They see the law as an equalizier.

Don't worry about the small operations -- they are software programs that will cost them very little. The story about there being 2 billion taxing jurisdictions and 20 trillion items is just smoke. As a practical matter, there will be little problem getting the vast majority of taxes right. No one cares if a few things are taxed at the wrong rate, that happens now too.
Mom & Pop operations do work thru Amazon
written by Tom Faranda, April 29, 2013 11:20
Dean that was a bit of a disparaging remark about Mom and Pop operations. there are several hundred thousnd home operations selling thru amazon.
written by Robert W., April 29, 2013 11:39
Odd that in this day an age people still under estimate computers. It would be no big deal for even the processor in your cell phone to calculate the sales tax for every zip code in America. it's a table look up for cying out loud on what is by modern standards an incredibly small data set. It's interesting that Congress didn't get around to this until pretty much all of the 'bricks and mortar' book stores and record stores had gone out of business though I don't think it would have made any difference in the long run.
A Real Solution
written by FoonTheElder, April 29, 2013 12:03
Sales taxes are regressive state taxes that are impossible for states to legally collect on out of state purchases by their residents. The RESIDENTS are supposed to pay use tax on any out of state purchases, but the state's solution to that failure to collect is to have companies with no connection to the state become their unpaid tax collectors. Computers won't do squat to help with Texas variation of 1,000 different rates and sales tax districts.

Instead of trying to depend on regressive sales and use taxes that they can't collect, why don't the states depend more on progressive income taxes or other similar progressive taxes. The reason is that the wealthy are making out like bandits in state and local taxation paying a much lower percentage of their income than the poor and middle class.

It's another sneaky tax where they figure if you don't see it, you don't know how much you are really paying. There is also the sales tax that states collect from out of state visitors, which is seen in the statehouse as 'somebody else paying the tax'.

The solution is not to make it easier for states to expand their collection of regressive taxes. It IS illegal for a state to require a company to collect taxes for a state when there is no legal connection to the state.
People still read George Will?
written by Anonymous, April 29, 2013 1:44
I used to read him religiously, decades ago, in Newsweek... back when news sources reported news, and political editorial writing was amusing to me.

I quit reading him (in any source) about a decade ago, after learning about his horrific undisclosed family conflicts of interest. Couldn't believe the lack of professional standards in the "journalism" industry (anymore?), and especially at the company that brought us Watergate. I thought journalism was supposed to be a profession? But I guess decorum and propriety aren't profitable, so we're back to yellow journalism and the standards of the early 1900s...

Anyway, I haven't missed the guy. Can't believe anyone still gives him a platform, actually. Is he still profitable to his employers?

As for the internet and sales taxes -- the playing field does need to be leveled, but it makes no sense to tax a vendor based on the domicile or current location of the purchaser. Can we quit fighting over a stupid idea and come up with a better idea?
GOP & Dem Rose Above What?
written by James, April 29, 2013 2:14
You might have missed the fact the politicians did NOT rise for any mom & pop stores but to Nat'l Federation of Retailers!!!

Such as Walmart, Target, Macy's, etc., hardly for mom & pop stores. :)

written by VicJane, April 29, 2013 2:45
What I find curious in discussions about requiring that internet sellers collect state taxes is the absence of mention of current state practices. In Illinois, for example, for the past several years the state income tax return has incorporated one way or another some method of including that sales tax. For 2012, the IL-1040 at Step 8, line 23, the income tax filer is directed to employ the Use Tax instructions and list the tax. Essentially that instruction gets you to a sales (use) tax amount either based on an estimate related to your income or from your actual spending. A few years ago Illinois had an sales tax amnesty program to get people into recognizing the state needed the money.

So, should we pay as we go or should we pay at the end of the year? What is more likely to maximize revenue for the states and minimize cost to the internet sellers? Shouldn’t that be the discussion?

As to benefitting internet sellers over brick-and-mortar? Really, you think I can get medieval English history at the local Borders? Oh wait—that store went out of business. What about knitting yarn? When I was young, every neighborhood had a yarn shop. If you think I’m going spend time knitting with the yarn sold at Joann’s, think again. Or, ever try buying a hand lens (for looking at plants with) in your state? The point is that many of us buy online because there is no local store that sells what we want.
written by Nick Batzdorf, April 29, 2013 3:17
The states are hurting. A regressive tax like this is not the answer to that. Federal aid to the states is.

Now, leveling the playing field with brick and mortar is a separate issue with more facets, and I don't have an answer to that. But this tax isn't a good idea.
Reply to "Regressive"
written by VicJane, April 29, 2013 3:57
I agree that sales taxes are regressive, but the proposed law is just to require internet sellers to collect and payover an already existing sales tax (if a state doesn’t have a sales tax, there is nothing for the internet seller to collect.)

Consideration of the impact of the proposed legislation on brick-and-mortar v. internet sellers is twofold: whether it favors one or the other and whether it aggravates the regressivity of the underlying sales tax. The first is answered by what is purchased online that could as readily be purchased locally; the second is answered by what income brackets buy online. My sense is that local sellers aren’t hurt and that lower-income folks don’t buy much online. It really would be nice to see some reliable statistics on this however.
written by Nick Batzdorf, April 29, 2013 5:46
Okay, Dean's addendum and VicJane's post make a good point.

Occasionally I'm wrong.
Baseball revisited
written by JParks, April 29, 2013 6:46
Last Mover
I am more reminded of the experiment years ago where Chimpanzees took college entrance exams. As I recall, (apologies to the Chimpanzee population) they would be a more appropriate comparison group to Congress than professional baseball players.

Question: When insulting such a group as the Chimpanzee population, is it considered an "ad hominem" attack?
Other considerations
written by JParks, April 29, 2013 8:22
I just did my first quarter sales tax remittance today. 96% of my sales are outside of my State and outside the US.

Each State has their specific exemptions to their sales tax provisions. Primary Production (Farming, Mining, Logging) and, of course, "For Resale" are common exemptions. Verifying and getting proper documentation for all these exemptions is and will be a bigger problem than collecting taxes. Respective State legislators will not remove these exemptions within their states without endangering their positions. They, the legislators, can be said to have sold out to special interests. (Similar to trying to eliminate farm subsidies at the national level or cancelling a few billion dollars in oil subsidies)

Taxes are like water in that they seek the level of least resistance. They do not normally flow uphill. I would like to see the States use this initiative as "cover" to eliminate all those special exemptions that were created, make it a real level playing field, and then enact the universal internet tax collection.
Based on the customer base represented by Internet purchasers I have to agree that it won't be as regressive as other options. Many of my customers are surprised that they are not being taxed on their purchases already.

I think we might also be surprised at how many business are already collecting taxes on Internet purchases and not turning it in! Collecting seems to be the "default" action and then they just keep it when they have no responsibility to turn it in to any taxng agency.
here i thought
written by Alex Blaze, April 29, 2013 10:38
conservatives liked the sales tax. Like they don't like any taxes, but if they had to pick a tax it'd be the sales tax.

I think someone tied his bow tie too tight this morning.
online = no sales tax, but shipping cost
written by Melissa, April 30, 2013 5:49
From a consumer's point of view, the lack of sales tax is just an offset to the extra cost of shipping that we have to pay, combined with the non-tangible cost of having to wait several days or even weeks for the product. I don't understand the glorification of the "mom and pop store" in a world with a much larger range of product options than even Walmart can stock in a single store. Let's help lower income people learn how to shop online (we do still have public libraries with free Internet computers in most places) instead of putting a "buggy-whip" industry defense in the way of what is clearly progress for consumer choice.
Reply to Melissa
written by VicJane, April 30, 2013 6:36
With respect to your suggestion that we "help lower income people learn how to shop online" I think this has less to do with knowledge of or even access to the internet than it has to do with lack of income. With lack of income comes lack of credit score comes lack of credit card. Surely you do not suggest prepaid debit cards? Nor do many of the low income families have checking accounts. The main point, however, is that they do not have money to spend so no matter how well you facilitate their spending it, it won't happen. Besides, your friendly UPS delivery person won't leave a package on their porch and they don't have cars to go pick it up at the distribution center.
written by Jim A, April 30, 2013 6:38
Since most states charge taxes on things bought out of state but people simply don't pay those taxes, isn't this tax enforcement rathar than a tax raise?
written by Kat, April 30, 2013 6:56
As pointed out, taxing Amazon does not make sales taxes more regressive. There is also the argument that taxing consumption is actually a social good when you consider that much of what is purchased online is not a necessity. As for teaching lower income people to shop online-- what exactly is there to teach? To me, this would be another measure that promotes the idea that what poor people suffer from is a lack of financial savvy rather than a lack of ,oh, money.
Do you want to know what is really regressive-- well, I have one example for you here. A business in my city was offered a sweet incentive package (sweet for them, that is) it includes 90% of local income taxes and 65% of state income taxes being credited back to the business. I call it wage theft.
written by Kat, April 30, 2013 8:12
I would like to clarify that those income taxes that are credited back to the business are worker withholding taxes. Workers are paying the boss.
Competing against the internet...?
written by David Helveticka, April 30, 2013 12:40
Hey, I work as a commissioned sales associate for a electronics retailer...On other impact you forgot to mention was the downward pressure on local wages of people working in brick-n-mortor retailers...I am told I have to work harder for less money 'cause my employer has to "compete" with the internet.

I am so sick of customers coming in to ask me questions or fiddle with our electronic gizmos and then tell me they are going to buy it online because it's "cheaper"---free 2 day shipping and they don't have to pay SALES tax!!! My employer will match the internet price, but many customers want us to include SALES tax in the price match.

Look, these citizens use local services like roads and fire departments and police just like I do---and they have no right to get their products "cheaper"---because they don't have to pay sales tax. Same for the shipping companies that the internet retailers depend on to deliver their goods.

written by liberal, May 01, 2013 1:47
David Helveticka wrote,
I am so sick of customers coming in to ask me questions or fiddle with our electronic gizmos and then tell me they are going to buy it online because it's "cheaper"---free 2 day shipping and they don't have to pay SALES tax!!!

It's true that there's some amount of free-riding going on (people examining products in brick 'n mortar stores), which makes the fact that internet sales have been immune from sales taxes that much more ridiculous.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.