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Of the many things clouding the equities event horizon, one of the ugliest for investors may be internet retail taxation. A recent tax bill in the amount of $269 million, sent by the state of Texas to Amazon (AMZN) stands as testament to that looming ugliness.Amazon claims that because technically its distribution activities are headquartered in Kentucky rather than Texas, it owes no retail sales tax to the armadillo state. So, the gauntlet has been thrown down and the challenge accepted.
The National Conference of State Legislatures estimates that over $8.5 billion in internet retail sales tax shall go unpaid for 2010. The major reason being that there remains very little solid framework of accountability and enforcement to collect these sales taxes. Technically, if businesses which should be collecting internet sales tax aren't, then consumers are expected to pay it voluntarily to the appropriate taxing authority. Yeah, we'll get right on that.
For Amazon investors, this particular tax blip on the radar screen is of only passing consequence and means almost nothing in regard to their investments. However, investors at large need to remain mindful that internet retail taxation is fast becoming an absolute, and eventually no internet retailer shall remain untouched.
In the final analysis, when the tax man comes, he comes for the bottom line, and that's the place where all capital investors live - or die.
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Reader Comments (Page 1 of 1)
10-25-2010 @ 4:56PM
Dan Barnett said...
So where are they? In Court? Having Texas seize Amazon's Texas assets? Has Amazon been paying Kentucky? (yeah right)
But if sales tax is to be a legitimate form of taxation, the question of internet sales needs to be addressed.