The days of buying online to avoid paying sales tax will soon become part of the much-lamented Good Old Days. The Senate this week passed the Marketplace Fairness Act and, although a final vote is scheduled for May 6, it's regarded as a formality.
With such big names as Amazon, Walmart and Best Buy behind it, the measure has a lot of steam, despite the "no new taxes" mantra that is the battle cry of the GOP.
Whether that's enough to get the bill through the Republican-dominated House of Representatives is another matter. It's not yet clear whether the GOP will stick with its pro-business roots -- which would seem to indicate support for the measure, seen as benefitting local businesses -- or whether it will try to mollify the Tea Party faction which views all taxes as evil incarnate.
Sales taxes are local
Bricks-and-mortar retailers have long complained that online merchants were robbing local communities of the tax revenue they need to support their schools, police and fire departments and other essential services but no one wanted to tackle the issue without being certain they wouldn't be hung out to dry by powerful online interests.
Thus, for all practical purposes, the battle ended the day that the largest online merchant of all, Amazon, threw its weight behind the idea. Critics would say Amazon made a deal with the devil, but the company's motivation is a bit simpler: it wants to offer same-day delivery in major metro areas and to do that, it needs to build warehouses closer to big cities.
To get approval for warehouses in California, New York and other essential markets, Amazon was willing to begin collecting sales tax -- but it wants to make sure other online merchants do the same.
eBay plays the spoiler
Although businesses have presented a pretty solid united front in favor of the measure, eBay has emerged as a spoiler. It has been lobbying for a higher threshold at which sales taxes must be collected.
Currently, businesses would not have to collect the tax if they sold less than $1 million. eBay has been arguing with a straight face that a $1 million retail business doesn't amount to much, something that no doubt comes as news to millions of small businesspeople.
eBay CEO John Donahoe has said it would place an immense burden on smaller retailers to have to deal with collecting the tax, even though that's presumably something eBay could do for its sellers.
Donahoe's argument may carry some weight when the measure gets to the House, though. It wouldn't be too hard to drum up a grassroots campaign that paints small online retailers as long-suffering, hard-working, over-taxed drones and few political careers have been ruined by opposing new taxes.