Seattle, home of Amazon, is not a low-sales-tax haven; its sales-tax rate of 9.5% is the same as San Francisco.
So this is not a matter of low-tax-jurisdictions winning over high-tax jurisdictions; it's a loophole that exempts a certain kind of transaction, no matter the direction.
Do we prefer people buy from distant merchants, so much that we want to punish local sales? Is there a case to be made that this approach optimizes welfare for people, or causes the most economic growth?
That case hasn't been made. This is a glitch in the law from when cross-border retail was too small to worry about. But since people have become wealthy from this glitch, it now has a constituency that makes change hard. That sort of entrenched-interest paralysis is not something to celebrate.
It's also not a California-specific issue. Even Texas finds Amazon's legal machinations to get out of sales tax fishy:
Companies should compete on the merits of their offerings; jurisdictions should compete on what sort of pro-business environment they offer fairly to all businesses, not just loophole-favored segments (like cross-border shippers). Otherwise productive effort is wasted in gaming legislatureslaws/borders rather than innovating and serving customers.
So this is not a matter of low-tax-jurisdictions winning over high-tax jurisdictions; it's a loophole that exempts a certain kind of transaction, no matter the direction.
Do we prefer people buy from distant merchants, so much that we want to punish local sales? Is there a case to be made that this approach optimizes welfare for people, or causes the most economic growth?
That case hasn't been made. This is a glitch in the law from when cross-border retail was too small to worry about. But since people have become wealthy from this glitch, it now has a constituency that makes change hard. That sort of entrenched-interest paralysis is not something to celebrate.
It's also not a California-specific issue. Even Texas finds Amazon's legal machinations to get out of sales tax fishy:
http://news.cnet.com/8301-10784_3-9942692-7.html
And even Texas requires residents to pay 'use tax' on out-of-state purchases:
http://www.window.state.tx.us/taxinfo/sales/faq_use.html#use...
Companies should compete on the merits of their offerings; jurisdictions should compete on what sort of pro-business environment they offer fairly to all businesses, not just loophole-favored segments (like cross-border shippers). Otherwise productive effort is wasted in gaming legislatureslaws/borders rather than innovating and serving customers.