To expand financial resources, states have levied online sales tax

To expand financial resources, various states have levied online sales tax. When many states across the United States are laying off teachers, closing libraries and parks, and cutting medical care services, some states are...

To expand financial resources, states are levying online sales taxes. As many states across the United States are laying off teachers, closing libraries and parks, and cutting medical care services, some states have enacted legislation requiring online retailers like Amazon to pay sales tax in order to expand financial resources. It is estimated that online sales taxes in the United States amount to approximately $23 billion each year. This revenue is enough to pay the salaries of 46,000 teachers. California's online sales tax, which is not collected by Amazon alone, is equivalent to budget cuts for child welfare services in the state, but it is very difficult for major online retailers to collect the tax. Online retailers must collect sales tax only in the states where they have stores or corporate entities; consumers must also pay tax according to law if they trade from out of state, but it has been difficult to enforce. According to current regulations, sellers do not have to bear the responsibility for uncollected taxes, and buyers can save 3% to 9% sales tax, because few consumers are willing to pay sales tax. Sales tax revenue in many states dropped by more than 30% from 2007 to 2010, prompting state lawmakers to explore ways to collect unpaid sales taxes. Texas Rep. Elliot Naishtat has proposed requiring more online retailers to collect Texas sales tax. She said: "The problem is that some out-of-state online retailers claim that they are not eligible for sales tax, which is an issue that could generate hundreds of millions of dollars in tax revenue for Texas." Texas has cut $24 billion in service programs due to declining tax revenue, including services for children, Medicaid, and low-income and disabled people. However, the online retail industry has cited the 1992 Supreme Court case in Quill and North Dakota, stating that state governments can only require companies with a physical presence in the state to collect taxes. In order to break through the limitations of this jurisprudence, some states have expanded the definition of physical presence. For example, as long as a marketing company hired by an online retailer or a company owned by it is located in that state, it is eligible for tax collection. In February, the Texas comptroller ordered Amazon.com to pay $269 million in sales tax because its subsidiary had a warehouse near Dallas. New York State also passed legislation last year that requires online retailers to have a physical presence in the state if they pay an in-state marketing broker commission. Since then, several states have quickly passed similar bills; Arizona, California, Florida, Massachusetts, Minnesota and Pennsylvania also have similar bills pending. California authorities estimate that at least $200 million is lost each year from uncollected online sales taxes, of which Amazon.com accounts for $83 million. However, in order to avoid being responsible for collecting taxes, Amazon.com has threatened to close its Texas warehouse, marketing branches in Illinois and North Carolina, and sued New York State’s legislation as unconstitutional.