In an article by Sarah Weinman, "Texas Sends Amazon a $269 Million Sales Tax Bill",we see the beginning of the end for On-Line Shopping.
In order to feed their insatiable hunger for tax, states, such as Texas
believe that they will be able to plug their budget hole on the backs of
the small business owners, many who don't even have a 'brick and mortar'
Their plan is to tax these companies right out of business. Like a tapeworm
or other perennial parasite, the states believe that this tax model will be
one of lasting income. A new source of revenue which will carry the state's
failing business model through to the next budget cycle.
In reality, this can be seen as the beginning of the end. Many of these
on-line businesses are working at a low profit margin in order to compete
against others providing the same service either locally or on the net.
The only differentiating factors they can provide is 'drop' shipping to
avoid warehousing the products and no sales tax.
They do, however have to collect for shipping and insurance.
So there is the trade off. No tax, Yes shipping/insurance.
If the states insist on charging these companies sales tax, then we will
see our options diminish. The on-line companies will disappear. The small
business owner will end up on the unemployment line, and the states will
still not get any of the tax money.
No, as a simple rule of thumb, it is best to spend only what you have. And
to the states I say, lower your liabilities. Reduce your operating costs.
That does not mean firing workers. It can be as simple as reducing their
wages, pensions and benefits to a level more commensurate with their
Guaranteed Government jobs should pay less than the average tax payer's
salary, which is offset by safety of the job.
The States should buckle down and start acting more responsible with the
tax money they are taking from the payers. Or the payers will just stop