Pennsylvania has become the latest state to institute sales tax on online companies with affiliates inside their borders, which has resulted in the cancellation of website affiliate programs in that state by B&H and possibly Amazon (if they follow past practice).
Thom Hogan has written a rant about this on his website. While I am sympathetic to Hogan and other website managers effected by retailers' affiliate boycotts in states like Illinois, I am going to state that I unequivocally disagree. There is absolutely no reason why online retailers should not be collecting sales tax, particularly when state budgets are suffering such significant woes. While retail behemoths have been successful at boycotting (or threatening to boycott) some states in retaliation, they can't boycott them all and Amazon's delay in pulling out of Pennsylvania indicates that they see the writing looming on the wall: yes, online businesses will too someday have to pay full sales tax.
Brick and mortar businesses serve a valuable service to their community. They provide local jobs and in the case of establishments like bookstores, local centers of community. Why should they be forced to collect tax when online retailers are not? Furthermore, the law is clear- sales tax is intended for all purchases in a state, whether made online or not. States have just been slow about enforcing the law.
For me (personally), would an online sales tax be convenient? Not really- we hope to generate sales here at Breningstall.com for both Amazon and B&H and a sales tax would help to diminish thatrelative advantage. But sometimes people have to put their personal interest aside for the sake of the greater good and that's something I hope Mr. Hogan can- and in fact does- understand.
He wisely writes, "The correct solution to the problem has been and remains: a single national sales tax collection agency that distributes money to the appropriate jurisdictions. Why is that the answer? Because there are over a 1000 different taxing agencies in the US. I live in only one of them (B&H has a physical presence in two of them). Companies cannot be expected to generate reports and checks to that many entities--many of which have differing collection rules and payment dates... There is a possible solution. It's called the SSUTA, which is basically is a centralized system to which all Internet and Mail Order companies would submit reports and collected taxes... The SSUTA has been proposed many times at the federal level, and almost half the states support some form of it. It is currently being considered by Congress under the name Main Street Fairness Act. Personally, I support a well-written version of the SSUTA, as should most reasonable folk: this notion that because you order out of state you don't have to pay sales tax (or use tax) is actually legally incorrect almost everywhere in the US, and it does change the dynamics of how business is done."
He goes on to talk about taxation without representation- that, I would say, is nonsense. If you're doing business in a state, you should be subject to that's states taxation, period. But I do agree that the paperwork involved should be reduced to a manageable level.
As a fan of Thom Hogan's website, I don't like that he's losing his revenue source, but I have faith that the states (including Pennsylvania) will ultimately win in this battle. There are schools that are going unfunded, roads that are going unpaved, state employees being furloughed or laid off, and medical services that are not being met while Amazon and B&H exploit a loophole in the law. I love Amazon and B&H- but just because I love them doesn't mean I'm willing to encourage giving them a sales tax collection exemption. Time to play fair.