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Home Publications Blogs Beat the Press Taxing All Internet Sales Is Consistent With Support for Small Businesses

Taxing All Internet Sales Is Consistent With Support for Small Businesses

Thursday, 12 December 2013 10:33

A NYT blog post by Robb Mandelbaum noted the findings of a study showing that more than 40 percent of Internet sales would escape taxation if a small business exemption was put into the law. The last paragraph tells readers:

"Somewhat surprisingly, given their claims to unwavering support for small businesses, House Republican leaders appear to be leaning toward legislation that would offer no small-seller exemption at all."

Actually, this is not the least bit surprising. The current exemption of Internet sales from the requirement to collect sales tax is comparable to exempting stores whose addresses end in the digit "3." This rule would effectively subsidize businesses whose last digit ends with "3" at the expense of other businesses.

There is no reason to have such a subsidy even if some of the firms who might take advantage of it are small businesses. The same applies to Internet sales.

Comments (4)Add Comment
Huh ...
written by Squeezed Turnip, December 12, 2013 11:08
i guess I should be heartened that the GOP house leadership is a helluva lot smarter than Robb Mandelbaum.
written by Joe, December 12, 2013 11:26
we could get rid of regressive sales taxes entirely.
written by Last Mover, December 12, 2013 12:38

Exactly. Small businesses are persons. Large businesses are persons. It's double taxation of persons.

Just tax business.
buyers should be responsible...
written by pete, December 12, 2013 1:52
E.g., if you drive across the border to a state with a low sales tax and buy cigarettes or liquor, then bring it back to your state to consume, shouldn't you also pay the sales tax? Why is this the federal government's problem anyway? This is a state problem.

Essentially what purchasing on line has done has been to eliminate the rents received by high cost local businesses. This will not change if buyers must pay sales tax on these purchases.

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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.