Editorial: Time for lawmakers to give Main Street businesses a chance
In the eyes of Amazon.com, Missouri is a very bad state.
It says so, right on a color-coded map of the United States that Amazon gives to its traveling executives.
The map was obtained by a Wall Street Journal reporter who wrote a compelling story Wednesday about the extent to which the Seattle-based company goes to avoid collecting sales taxes from customers outside of Washington state.
Missouri is one of the states that has been considering (so far, not very seriously) passing a law to require Amazon and some other online retailers to do what other companies already do: Charge customers the appropriate state sales tax and remit that tax to the state.
But Amazon is built on a business model that specifically avoids the sales tax and, therefore, underbids companies, like Borders, for instance, that rely on their physical presence to sell books.
Borders is going out of business.
Amazon is laughing all the way to the bank.
It's time that Missouri lawmakers, with the help of Congress, put an end to this farce and accomplish two things: Collect revenue that already should be going to state treasuries and put Amazon on fair footing with tax-paying, job-creating local businesses.
The dispute is tied to a 1992 U.S. Supreme Court ruling that said online businesses only have to pay state sales taxes if they have a physical "nexus" in a state. A store or an office building is a nexus. Other things might be construed as a nexus, which is why Amazon issues maps to its executives.
Former company executives told the Journal that employees were told to avoid traveling through "bad" states that either had enacted streamlined sales tax legislation or were considering such laws. You never know when some lawyer will accuse you of creating a nexus.
Pity the students at the Kellogg School of Management at Northwestern University. Amazon regularly recruited employees and interns from the business school in Evanston, Ill. When the Illinois Legislature began considering a streamlined sales tax bill — it passed this year — Amazon chose to seek employees from other institutions.
Missouri lawmakers have estimated the state could raise at least $20 million more by simply collecting the Internet taxes that the Amazons of the world are dodging. In Illinois, the estimate is much higher, around $160 million.
In two states suffering different levels of financial distress, collecting that money should be a simple task for lawmakers. It's not a new tax. It's a simple law-and-order enforcement of existing rules that should be applied fairly to businesses selling goods in the ever-changing online marketplace.
Amazon is right about one thing: Having a patchwork of laws in different states could make things difficult for companies, even those with fancy, color-coordinated maps. So the best solution would be for Congress to devise one solution to the problem that can apply nationally.
Sen. Dick Durbin, D-Ill., has filed such a bill. The Main Street Fairness Act would give states the clear authority to adopt the streamlined sales tax while also requiring that the rules be relatively uniform.
The only question for anti-tax Republicans in Missouri and in Congress who have stood in the way of proposals to stop this fundamental unfairness is this:
Do they stand with Main Street or swim with the Amazon piranhas?