N.C. right to challenge Amazon.com on sales tax

Posted: Monday, April 26, 2010

The following editorial first appeared in the Seattle Times on April 22:

In Amazon.com's fight with North Carolina, we side with North Carolina.

The Tar Heel State says its residents ought to pay the same sales tax if they buy from Amazon or the corner bookshop in Winston-Salem. It calls this matter "an issue of fairness and equity for small businesses, the brick and mortar, corner-store operations."

We agree. Local retailing has long been put at an artificial disadvantage. This is particularly true of retailers of books, Amazon's original market.

Internet retailing has grown up. It no longer needs a tax loophole in order to compete, if it ever did, and its tax status is inherently unfair.

When mail order was a relatively small industry, the tax leakage did not matter much. But it is small no more.

Amazon says that between Aug. 1, 2003, and Feb. 28, 2010, it sold more than 50 million products to customers in North Carolina. If that figure grabbed the attention of the tax collectors in North Carolina, it is no surprise. Its tax department made a request, and Amazon supplied it with figures for gross sales by ZIP code.

What the company has not done, and what North Carolina wants it to do, is to provide buyers' names and the amounts they bought.

To block this, Amazon has gone to federal court in Seattle. There, the company is waving its arms about the First Amendment, saying North Carolina is asking for the titles of the books and DVDs its citizens bought, and that this is not a governmental concern.

If a state were asking for that, the company would be right. But the Tar Heel State does not want to know the names of books and DVDs its residents are buying. It wants to know what taxes they are not paying.

This is not a First Amendment issue. The First Amendment does not make books and movies tax-free.

Here is some advice for Amazon. You are going to lose this fight. Maybe you will win in this courtroom and maybe you will not, but you are going to lose in Congress. There is no way Internet retailing can continue without payment of state taxes.

Already there is an effort of more than 22 states to lobby Congress to create a federal law about this. They ought to prevail, and they will. Accept it now, and get on with business.

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