Even though most states require their residents to pay sales tax on internet purchases, none have figured out how to enforce it, and companies such as Amazon (NASDAQ: AMZN) and eBay (NASDAQ: EBAY) have benefited hugely by the public's perception of the 6-10% cost advantage they realize by not paying the tax.
Not surprisingly, states suffering from tax shortfalls are screaming foul, and Washington is listening. According to the New York Post, a bill could be introduced this week to put the burden of tax collection on internet retailers.
The U.S. census estimated that in 2008 retail sales hit $103 billion dollars. If we assume that local taxes will also be included in the bill, at 8% roughly $8.25 billion should have flowed into state and local coffers. Amazon alone, with sales of $19 billion, could have collected $1.52 billion. According to the Rockefeller Institute, during the recession sales taxes collected by the states have dropped by 6.1%, the worst decline in half a century.
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