Amazon, the online retail giant, is thumbing its nose at California, and now some California shoppers are returning the favor.
In response to Amazon’s refusal to collect sales taxes, some shoppers are vowing to take their business elsewhere.
We don’t blame them.
We get the appeal of online shopping: It’s convenient, the selection is good and there are significant bargains to be had — even without the sales tax break.
You could even argue that the reduction in trips to shopping malls is good for the environment, though that might be offset by increased packaging and deliveries associated with online sales.
However, in refusing to collect sales tax from California customers, Amazon and other online-only retailers are depriving state and local governments of sales taxes they desperately need to maintain schools, police forces, health departments, roads, parks, libraries and other vital services.
And by cutting ties with its California affiliates — online vendors that receive a share of profits when they steer business to Amazon — the retailer is behaving worse than a schoolyard bully.
Granted, the $200 million to $300 million that the “Amazon tax” is expected to generate for California this year is not going to make or break the state budget. But with online commerce growing steadily, that figure is bound to grow, and states will continue to suffer.
And it isn’t just lost sales tax that’s at issue.
We believe local merchants are at a decided disadvantage when they are legally required to collect sales tax, while online retailers are not, as long as they have no physical stores, offices or other facilities in California.
That gives an Amazon or Overstock an edge over local brick-and-mortar retailers, even though these merchants have a much bigger stake in our communities.
They provide employment, they often lend a helping hand to nonprofits, they keep downtown business districts vibrant and safe.
If you don’t believe that, just look at a downtown with vacant storefronts and see how quickly the buildings become targets of graffiti and vandalism.
So what’s getting in the way of collecting sales tax from Amazon and similar online retailers?
In 1992, the U.S. Supreme Court ruled that a company must have a physical presence in a state before it can be required to collect sales taxes from its customers.
That doesn’t mean buyers are completely off the hook: Online shoppers still are required to calculate the taxes they owe and to pay them. But the state doesn’t enforce that rule, and many consumers don’t even know that it exists.
It’s been estimated that as few as 1 percent of online shoppers wind up paying sales taxes on their purchases so clearly, self-reporting isn’t working.
As an alternative, a national tax that would be collected by online retailers may be the most viable solution.
The U.S. Supreme Court has made it clear that Congress has the authority to pass such a tax, and that may be the most effective way to close this loophole.
Bottom line: Saving a few bucks on sales tax today by buying a book, a pair of shoes or a set of mixing bowls online means that much less money for our schools, our police and fire departments, our senior centers and our libraries.
And that may wind up costing us much more over the long run.