Internet Taxes in 2015
When Republicans took Congress in the 2014 midterm elections, Speaker of the House John Boehner announced that the bill to abolish tax-free Internet shopping had itself been abolished; this disappointed businesses around the United States. Brick-and-mortar retailers have long complained that they are at a disadvantage as compared to online retailers because many online retailers choose to dispense with sales tax.
That was 2014. What about today?
"Main Street Fairness Act" taken up again in 2015?
This bill, called the "Main Street Fairness Act," will stay on the sidelines for now. That means that so far, Internet retailers still don't have to demand sales tax, but this is an issue that's going to come up again – and again.
Why so difficult a passage?
It might seem obvious that many customers, for example, don't want online retailers to have the requirement to collect sales tax. However, there is another drawback, one that's perhaps more glaring.
New tax collecting system?
Costly and very complex: That is, a new tax collecting system would need to be set up that would encompass thousands or even millions of business and tax jurisdictions. This would be costly, and very complex. And, it could hurt small businesses.
Doesn't faze bill supporters
Those in traditional retail continue to insist that they are at a disadvantage as compared to online retailers because their customers do have to pay sales tax. And that hurts them when they must compete against similar online retailers.
Online retailers counter point
Although traditional brick-and-mortar retailers complain that online retailers are at a significant advantage if they don't have to charge sales tax, online retailers point out that they assume shipping costs that online retailers don't. This is, in effect, their "tax money" that is going not to pay taxes, but to getting a product delivered. Shipping costs and storage costs must still be paid by online retailers, and those costs will be passed on to customers even if retailers continue to offer "free" shipping.
Should the government intervene?
Eventually, it's likely that if there's enough support both politically and through business entities for there to be an Internet sales tax, it's almost certainly going to happen; the Obama administration, for example, is currently in support of this. However, a current wrinkle is that small Internet companies can't register and become compliant with every state's tax laws; in order to comply, accountants would need to be paid just to make sure every business paid what it owed at the end of every transaction. Large businesses can easily absorb this cost, while small ones will feel the crunch.
A corporate ploy?
Could this Internet sales tax delay be a corporate ploy? Certainly, smaller businesses can't easily absorb tax compliance expenses, while larger businesses can. So it could be said that some larger businesses and corporations may want the tax hike to go through – even if doing so would cost them more money – just because that may flatten the competition.
Safe for the time being
All of this said, it's still pure speculation. Right now, the online tax is dead or at least in a coma, thanks to John Boehner. In the future, time will tell.