The Double-Edged Sword of Online Sales Tax Reform


"Chalk up another victory for brick-and-mortar retailers," reads Bloomberg's reporting on the recent Supreme Court ruling for online sales tax. At first glance, it seems like a win. However, for all brick-and-mortar retail's complaints about Amazon, and the current administration for that matter, the courts may have just handed Amazon a brick of gold.


As discussed in a previous posting from The Fortis Advisor, 51% of a surveyed consumer group does not pay much attention to online sales tax and arguably accepts high shipping costs in lieu of not having to pay the tax. Amazon Prime stands to benefit considerably with its free shipping options as a potential offset to any new online sales taxes.


But also consider that for small online businesses with revenue greater than $100,000 that are subject to having to collect online sales tax, following the rules may prove more expensive than they can afford. If they close shop, not only does Amazon lose a competitor, but if retailers in the Amazon Marketplace are affected and drop out, Amazon stands to absorb the additional revenue from selling directly.


What's more is that there is no evidence of revenue neutrality in the discussion. The additional online sales tax will be just that - an additional tax on consumers.


"And the winner is..."

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