Today is a day that online retailers have claimed as their own, for getting people to get online and buy stuff. It’s somewhat obsolete now, as online shopping is simply taking over for a lot of people, but the idea’s still out there.

But there’s one huge misconception about online shopping: that it’s tax free. It’s actually not, yet it’s hugely popular anyway!


Photo by F33 on Flickr

It’s not generally true though. Sure, if you order from a mom-and-pop 3 states away you’re going to avoid sales tax, but industry leaders are increasingly charging sales tax. And as it turns out, by early next year Amazon will be charging sales tax on 3/4 of their customers. They’re already well over half. And don’t forget: more and more small time sellers are going through the big boys like Amazon.

So the next time someone tells you that forcing internet sales tax is a matter of “fairness” and it’s only because of that, that the old retailers are failing miserably, remember this:

“Our checks have suggested there is a short-term benefit to their business in the months leading up to the start of tax collection, followed by a slowdown that lasts a few months after they begin collecting,” says Colin Sebastian, an analyst with Robert W. Baird & Co. “However, there is little data to support the view that taxes have a longer-term negative impact on Amazon.”

Sebastian says he thinks any negative overall impact that adding a sales tax might have on Amazon is mitigated by the fact that people shop the site primarily for convenience and selection.