It looks like 12 states governments could be taxing our Amazon.com purchases in the near future. (I hate you, Government!) That means some of us will be saying saying “goodbye” to tax free purchases on high-end electronics and home goods and cringing at the extra 10% added on to our dreaded subtotal. Cash strapped state Governments are set to collect, but is it worth the cost to the customer and Amazon.com? Methinks not.
How Taxing Amazon Could Hurt Everyone
If Amazon.com is taxed I become poorer and so does every other middle class online shopper. Taxes like these hit the poor and middle class the hardest too and may actually effect where we shop.
I know I have went to Amazon more than a few times to make large purchases on electronics and other items simply because I knew I could save a few bucks by avoiding the tax (plus Amazon has great prices). I doubt Mitt Romney considers such things when he’s buying a new laptop or TV.
More taxes also means bad things for Amazon.com. Many consumers head online instead of their closest retailer to make their purchase just to save a few bucks. If the Government takes away the cost incentive and we consider other factors such as paying for shipping and waiting for the item to come in the mail (waiting!?) it becomes clear Amazon may take a hit.
How Taxing Amazon Could Help Everyone
On the other hand there is an argument to be made that taxing Amazon.com will do more good than bad. For one, retailers may see an increase in revenue. That could mean (maybe) more jobs for the local economy.
Also, since a lot of states are barely making ends meet with their current tax revenues a few million (or billion?) in revenue could mean additional public services. And while most of us in the middle and upper class may not benefit directly from the tax – some people relying upon State Government services may reap the benefits. However, it is worth mentioning no State Government has outlined where the extra tax money might go – or who it might go to.
Basically, an income tax on Amazon.com will serve as a transfer payment from the middle class to the poor and to the Government. It’s hard to say if that’s a good thing or not, but somehow I doubt that anyone (especially the poor) will see much benefit or increased Government service as a result of taxing Amazon.
The biggest loser will undoubtedly be the middle class and Amazon.com.
What this means for Technology and the Internet
Honestly, I think this is bad news for technology and the internet. Internet companies have long fought problems inherent in online shopping – such as building trust with customers, convincing people to pay shipping costs, and getting past the “I want it now” culture. Taxes have actually been a safe haven. The one incentive customers have (not withstanding convenience and choice) to shop on the internet instead of their local department stores.
The internet has long been the new Wild West and taxing Amazon.com is just one more small step to regulate it. Attempts made by ISPs and the Federal Government to regulate the internet and online communication is just one angle – taxation is another. I fear that establishing a precedence of taxation on internet sites will only serve, in the long run, as the first step in a long line of techniques to implement further regulation and governance.
Amazon.com has worked for over a decade to be competitive in the marketplace. It has done so mostly with great customer service and by doing a great job adjusting to market demands. Only the customer has benefited. I say leave them alone and let retailers figure out how to compete without the help of the Government. The rest of us will benefit with lower prices and better service – something more taxes can never promise.