Should Amazon Charge Sales Tax?

Borders bookstores are closing and laying off 10,700 employees.  Bookstar closed months ago.  Record stores are almost gone.  How many other retailers are going out of business not because of the recession, but because of Internet sales?  And I have to admit I love Amazon and buy most of my books there, and when I bought CDs, I bought them mainly from Amazon.  I also buy my underwear, running shoes, pet supplies and other stuff from them too.

How can people not want to shop Amazon with it’s deep discounts and no sales tax, and if you buy $25, no shipping.  It’s a lean mean selling machine.  But is Amazon and other Internet retailers good for the economy?  My state, Tennessee, like so many others is really hurting for revenue.  If everyone bought locally the state would have more sales tax and maybe more people with jobs to pay even more taxes.

Taxes are considered satanic now, but I can’t help but wonder how much Tennessee would gain if they could collect taxes from Internet retailers.  Amazon has taken a rather arrogant approach to this – fighting states every way they can not to  charge sales taxes.  I don’t know why, I’d still buy from them if they charged sales tax, they offer deep discounts that are hard to resist.

The other thing I have to ask myself, is why am I buying more online when I should be buying less?  When I visited Borders last week I was shocked by changes I saw there, a store I’ve been shopping at for years.  It’s a national company like Amazon, so why should I feel any different about it going out of business rather than Amazon?  I think one reason we don’t pay sale tax with Amazon is because they are going to set up two distribution centers in Chattanooga, employing 1200 regular and 2000 seasonal people.  But does that offset the sale tax revenue and does it make up for all the jobs lost to Amazon’s competitors?  Isn’t this the same story as Walmart, but without the big superstores?

It’s way too hard to understand the subtle economics behind this issue, but I would love to see a well researched documentary on the subject.  I did find this video but it’s heavily bias.  I need to see an in-depth NOVA episode devoted to this issue.

Evidently, sometimes jobs are worth more than sale tax revenue, or so this article from The Tennessean suggests.  It hurts my head trying to understand this problem.  Should I feel good about shopping with Amazon, or should I not?  So Tennessee has made a deal and gets jobs instead of sales taxes, but what about all the other states that don’t get distribution centers?

I admit I have no answer for the question I asked at the top of the page.  Maybe it’s just too complex to answer.  Maybe I should just accept what my state law makers have decided, assuming they know best.  I don’t know.

Yet, I have one last thing to wonder about.  What if everyone bought everything they could online?  Besides book and record stores, what other kinds of merchandise can online retailers take away from local businessmen?  Mail order businesses have been around since the 19th century – do they show the limits of what people will buy sight unseen?  Could it be that book and record stores are disappearing because physical books and records are disappearing?

If that’s true, what’s going to happen to Amazon?  Well, they selling Kindles, MP3 songs and downloadable movies and TV shows.  If physical book and CD sales are down, then why do they need so many distribution centers?  Well, Amazon is selling other stuff.  I’ve also bought things like a HDMI cable, a Blu-ray player, computer parts, and TV antennas from Amazon, as well as running shoes and underwear.

Maybe the Amazon sales model is just progress and there’s no going back.  I still feel bad about Borders and Bookstar though.

JWH – 7/18/11