This New York Times piece on the Amazon-California sales tax dispute misses the long-term perspective. In the 90's, when online commerce was just taking off, having it free from sales tax was absolutely the right thing to do, since it gave an advantage to a fledgling industry that needed every advantage just to survive. But now that online commerce is becoming the dominant model in many industries, it is almost criminal to continue to provide that advantage.

Like so many others, I love the convenience of shopping at Amazon, the unparalleled selection, the great customer service, the ease of checkout, the low prices. I don't need the added incentive of no sales tax to make me shop there. Yes, it would be a minor inconvenience for Amazon to collect sales tax for every county in the nation (but hardly the challenge they make it out to be, given the power of computers to handle repetitive tasks, and Amazon's vaunted capabilities at building scalable systems.) But at this point, the added advantage we're giving to them and other online retailers is completely unnecessary, except to gild their bottom line. Meanwhile, it's doing terrible damage at the local level, which our society will one day rue.

We're seeing the result in shuttered local businesses, which degrades the quality of our towns. I was really surprised on a recent visit to Harvard Square to find the old Wordsworth bookstore location still empty seven years after the bookstore's closure. What a sign of the decline of local retail when a prime location in the heart of one of the most prestigious college towns in America has remained empty. I understand why it would not have been filled by another bookstore, but the fact that no other retailer has been able to survive there is a telling example of just how far the pendulum has swung in terms of what kind of business needs preferential tax treatment!

The damage to local and state government is even greater. Local services depend on sales tax for their funding. As local retail declines, so does the community's tax base. Services decline (I was just in a vacation community in the Sierras this weekend where I was told I had to haul out my trash to another town 15 miles away!), and the quality of life goes with them.

Amazon's attempt to avoid sales tax is one more sad example of the short-term thinking that rules American business. Amazon has to be aware of the long term trends in retail and its consequences for local communities, but they are selfishly putting their own short-term advantage over paying their own fair share of what it takes for us to function as a collaborative society.

If California fails in its attempt to collect online sales tax, there will be other taxes levied on us that are far more onerous (see for example California's attempt to collect "use taxes" for online transactions http://consumerist.com/2011/03/california-may-go-after-online-shoppers-for-unpaid-taxes.html ) This shifts the compliance burden from an online retailer, who can easily track and charge the tax at point of sale, to us as individuals. This is a truly horrible outcome, one that would do far more to drive me away from online retail than paying sales tax.

In an imaginary world where Jeff Bezos was as public spirited as he is far-sighted about pursuing competitive advantage, Amazon would not only willingly collect and pay sales tax, but would offer the infrastructure they built for doing so to other online businesses. Amazon would encourage other online retailers to also adopt this policy, realizing that a society in which every member pays a fair share is a far better society than one in which particular business segments or particular individuals successfully avoid paying taxes while still reaping the benefits that then must be paid for by others.
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