Let the Protectionism of Brick and Mortar Stores Begin

Brick and mortar stores have been begging the state to give them some kind of protection against online retailers for years now, and the Senate has seen fit to grant that protection:

WASHINGTON — The Senate sided with traditional retailers and financially strapped state and local governments Monday by passing a bill that would widely subject online shopping — for many a largely tax-free frontier — to state sales taxes.

The Senate passed the bill by a vote of 69 to 27, getting support from Republicans and Democrats alike. But opposition from some conservatives who view it as a tax increase will make it a tougher sell in the House. President Barack Obama has conveyed his support for the measure.

The brick and mortar stores played it safe and offered the state a method of protectionism that benefited themselves and the state, taxation. Online retailers have so far avoided requirements to collect sales taxes in states they lack a physical presence in. This bill would change that, which would require online retailers to know the sales tax laws of every individual state in order to collect the appropriate amount.

A far better solution, if evening the playing field was really what brick and mortar stores were after, would have been to lobby for the abolition of sales taxes. But leveling the playing field wasn’t what those stores were after, they wanted to make it difficult for online retailers to operate, hence they lobbied for a law that would require online retailers to know the tax laws of all 50 states. Imagine the strain such a requirement will put on very small online retailers. If you’re operating an online business by yourself are you going to be able to familiarize yourself with the tax codes of 50 separate states? This law really stands to put those small operators out of business, which is probably why Amazon supported the legislation. Sure, Amazon many have to pay money in taxes, but it will also crush small competitors in the process.

An online sales tax is nothing but a victory for protectionism.

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