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Cyber Monday Success Argues Against Radical New Internet Tax

Cyber Monday 2013 was an unprecedented success for everyone involved  – including state tax collectors.  So why are we still arguing about new Internet tax schemes?

According to most estimates, Cyber Monday sales were up nearly 20 percent from 2012, a jump made even more impressive by the otherwise plodding pace of our economic recovery.

For consumers, Cyber Monday was an opportunity to get great deals, away from the massive – and sometimes dangerous crowds at the stores on Black Friday. For online retailers, it was the biggest sales day of the year.  And for tax collectors, Cyber Monday was a massive infusion of cash.

The nation’s largest online retailer,, reported sales were up a stunning 46 percent over Cyber Monday 2012.   And Amazon is now collecting taxes for more than half the nation’s population, since its growing network of distribution centers requires sales tax collection under current law.

While state tax collectors are slower to publish their revenue data, we can safely assume that 2013 will be a record year for sales tax on online sales. That’s a little ironic, because 2013 was also a record year for Walmart and Amazon lobbyist spending — to convince Congress that radical new sales tax legislation is needed to “level the playing field”.

Something does not compute.

Nobody is opposed to a fair and simple system that allows online retailers to collect taxes for multiple jurisdictions, but that is not what is being debated by lawmakers today. Instead, the Senate rushed legislation to the floor without a hearing, seeking to foist unending tax and audit burdens on catalog and online sellers.

Supporters of the proposed regime have been telling us that we must hurry to bail-out states that are losing out on tax revenues. If that isn’t the case, maybe it’s time for us to reexamine exactly what we’re trying to accomplish.

As I said on Monday – before the numbers were in:

“A new online tax system is not going to save main street stores from their big-box competitors.  New tax burdens will extinguish their last hope of reaching new customers, and expose them to audits from dozens of distant state tax collectors.”

Image via Bing Creative Commons/12-3-2013