May 13, 2013
In an overwhelming show of support, the U. S. Senate voted 69-27 to let states collect sales tax on out-of-state online purchases. While the measure still has to make it through the House, you can bet your boots consumers will be paying online sales tax before the next holiday shopping season rolls around. And who do we have to thank for this increase in taxes? Wal-mart, of course.
Currently, online retailers are only required to collect sales tax on purchases made by consumers who live in states where the online store has a physical presence. The proposed measure would require all online retailers with more than $1 million a year in out-of-state-sales to charge sales tax on all purchases, regardless of the consumer’s location.
It’s not surprising that the bill is being sponsored by Wal-Mart’s own Congressional representative, Republican Steve Womack of Arkansas. For nearly a decade Wal-Mart has been been fighting to develop their own online presence while watching Amazon gradually eat into their substantial corporate profits.
The mainstream media is reporting that brick-and-mortar stores, namely Wal-Mart, want to level the playing field, claiming they’re losing sales and market share because they’re required to collect sales taxes on every purchase but online retailers aren’t. The bill’s proponents say that states are losing $23 billion annually in sales tax revenue.
But let’s make one thing perfectly clear: This bill is being sponsored and pushed through by Wal-Mart, and it has nothing to do with “lost tax revenue.” This is just another Wal-Mart scheme to increase their own profits.
As I explained in “The real reason Congress wants to tax your online purchases,” the average American consumer has a finite shopping budget, whether he shops online or off. If he shops offline, in a brick-and-mortar store, the retailer collects the sales tax and turns it over to the state. That consumer also has to buy gasoline to travel to that store, which results in additional tax revenue for the state.
If the consumer shops online he may not currently be paying sales tax but he does have to pay shipping and handling charges. Yes, he can buy a little more for his money, but he still has the same spending limit. But here’s the kicker, the state still gets its tax revenue from the trucking company that delivers the product and from the wages of the employees of the trucking company.
In reality, there is no “lost” revenue, it merely comes from a different source. So, if this measure passes, it will essentially be a tax increase, floated on the backs of the consumer.
Not only that, Wal-Mart is betting that when consumers see that new state tax added to their online shopping bills they won’t make the connection, they’ll just hit “Delete” and head to their nearest Wal-Mart.
Now can you see why this bill is getting so much support? The states all get an increase in tax revenue and Wal-Mart makes even more profits and destroys a few more businesses – and it all comes out of the American Consumer’s pocket.
Senator Ted Cruz, R-Texas, voted no during yesterday’s debate. “The impact of this bill is to hammer the small-business online retailers, to make it harder for the little guys to compete,” he said.
Right now, as the bill stands, it only affects the major online retailers but we all know what happens once the Waltons get their feet in the door. Wal-Mart isn’t trying to “level the playing field,” they’re trying to eliminate it.