Re: “Beware the Amazon,” March 12 David Harsanyi column, and “Amazon buyers beware: State has it in for you,” Feb. 3 Vincent Caroll column.
I was dismayed to read David Harsanyi and Vincent Carroll’s columns on sales tax collection in Colorado. The system they defend has government picking winners and losers in business, a terrible policy.
The new Colorado Internet tax code doesn’t go anywhere near a true online collection of state and local taxes, but if it did it would not be a new tax, but rather enforcement of existing tax law.
I have observed a steady decline of in-state business due to this inequity. I have also seen a steady rise in sales-tax rates, because as government sees tax receipts fall due to more online sales, it hikes tax rates, driving more consumers online to avoid sales tax and creating a vicious circle.
Mr. Harsanyi also states Internet retailers shouldn’t be treated like local retailers since they have better technology and marketing. I wonder how he would feel if a young neighbor moved in and was told he wouldn’t have to pay property taxes, since he is “a new and invigorating force” on the block? What if Mr. Harsanyi’s own taxes would then increase to make up for the city’s new lack of revenue?
Or, in a business comparison, how would Mr. Carroll manage a store paying an 8 percent tax on inventory that competitors did not? Would you as their customer shop for a $1,200 flat screen TV online and then buy it from a local store charging $1,300 because they had to include sales tax? If the local store is lucky, you’ll give them a chance to match the $1,200 price, but that extra $100 comes out of their profit, and they still have to pay the state. With margins in electronics razor thin, they may have just lost money selling that TV to you. Good for you, but not too sustainable.
Arguing that extending enforcement of tax law to the Internet will cost local jobs is a red herring. The real problem is that Colorado is one of the first states to consider this issue. A level playing field throughout the U.S. is the answer, but it has to start somewhere. When I hear anecdotal stories about Internet sales contractors cutting jobs, I think of the untold jobs already lost in retail, law enforcement, real estate and more as a result of this inequity.
I believe in Internet businesses as a vital component of our future economic growth. They are making the most of the current system, as good businessmen should. At the moment, however, they have advantages not available to our own local businesses, contradicting good policy and basic common sense.
Dave Rivard of Littleton has been a nationwide and regional wholesaler and retailer of electronics hardware and software for 25 years.
