Feature

Make Web retailers pay their taxes

U.S. lawmakers made a big mistake when they waived taxes on e-commerce companies, thus granting an “overgenerous subsidy” to what is now a $200 billion industry, said Christopher Caldwell at the Financial Times.

Christopher CaldwellFinancial Times

It’s “a great injustice of the information age” that retailers like Amazon.com don’t have to collect and pay sales taxes, said Christopher Caldwell. U.S. lawmakers made a big mistake in the 1990s when they waived taxes on e-commerce companies, thus granting an “overgenerous subsidy” to what is now a $200 billion industry. California Gov. Jerry Brown should be applauded for signing new legislation that applies the sales tax to online purchases in his cash-strapped state, where until now Internet retailers have been legally favored over brick-and-mortar stores.

Incredibly, Amazon has decided to simply ignore the new California law. The company argues that it has no physical presence there, which it claims was established as a condition of state taxation by the Supreme Court in 1992. But that judgment wasn’t as clear-cut as Amazon suggests, which may be why it wants to take the issue directly to California voters in a referendum. The company’s “ruthlessness” could end up casting a harsh light on an uncomfortable fact: that Amazon’s wild success on the Web relies on “the tax exemption, not the technology.”

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