News and Commentary

Trump Wants You To Pay Taxes on Buying Stuff Off The Internet

Donald Trump says he wants to strengthen Americans, that he’s in their side. Yet speaking on radio show host Hugh Hewitt’s talk show, Trump joined Hillary Clinton in propounding the notion that there should be an internet sales tax. Reuters reported last July that Clinton said she “supported allowing cities and states to tax online purchases, but she would not mandate it.”

On Thursday, Trump bloviated, “Amazon doesn’t pay tax. … And a lot of people think Amazon should be paying tax, and they’re not, and they’re destroying department stores and retailing all over the country…”

The odd thing is, Amazon has supported a bill requiring it to charge sales tax. As per usual, Trump sounded off on issues without any depth of understanding. National Public Radio explained why in 2013:

Collecting state and local sales tax all around the country would require a fair bit of effort on the part of online retailers, because sales tax rules vary from state to state. That’s not a huge deal for a giant company like Amazon, but it would be more of a burden for smaller online retailers. From Amazon’s point of view, that’s a good thing — it makes life harder for Amazon’s smaller competitors …

Under current law, Internet retailers have to charge sales tax in states where they have a significant physical presence — like, say, a big warehouse. For a long time, Amazon kept warehouses out of big states so it could avoid charging sales tax in those states.

Brick-and-mortar retailers didn’t like this, and started lobbying state governments to push for Amazon to charge sales tax. So Amazon changed its strategy. The company agreed to start paying sales tax in more states — and it started building huge warehouses near major metropolitan areas in those states. The warehouses meant the company had to start charging sales tax. But having warehouses closer to big cities also allowed Amazon to start offering same-day delivery to millions of customers.

Heritage Action’s Chief Executive Officer Michael A. Needham strongly disagrees with Trump and Clinton:

Forcing online retailers to act as tax collectors for states in which they have no representation is a bad idea. There is nothing fair about forcing a small, online business in Tennessee to play the role of tax collector for California. Presidential candidates should turn their attention to creating opportunity for everyone, not doling out favors to well-connected businesses and revenue-hungry state governments.

Christine Harbin, the director of federal affairs and strategic initiatives at Americans for Prosperity, explained further:

All generations of Americans would feel the impact of this tax, as nearly 80 percent of the population over the age of 15 shopped online in 2014. But the Millennial generation would be especially would be especially hard hit. Over one-third of Millennials prefer online shopping to going to stores in-person, according to a recent study. Internet sales taxes would discourage this generation from making online purchases nearly as often.

And small-to-mid-sized businesses and entrepreneurs would suffer as well. They’d be responsible for collecting and submitting taxes to the many states and localities their online customers come from. That’s a daunting task, given that there were nearly 10,000 different U.S. tax jurisdictions as of 2014, and that number grows every year.