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« Bow Before My Awesomeness | WILLisms.com | Trivia Tidbit Of The Day: Part 287 -- Canadian Crime Wave. »

eCommerce, Home Depot, Texas, & Sales Taxes.

A few weeks ago, we bought a Rubbermaid Big Max Jr. shed for our new home, so our garage could be clutter-free. Overall, a very nice shed that I would recommmend:


From what I gather, these sheds are available only at Home Depot. So that's where we got ours. Unfortunately, no Home Depot in the area had the accessory kit, so I had to go online to buy it.

No problem. I buy things online all the time.

But this time was different. And not good.

I was charged SALES TAX. On the internet.

Sales tax.

On the internet.

For only the second time ever (the first on iTunes).

Not good.

Usually the lack of sales tax offsets or mitigates the shipping and handling costs, if there are any. But paying shipping and handling, PLUS sales tax?

A 20-something dollar item suddenly becomes a 30-something dollar item.

Irritating. And potentially damaging to the fledgling eCommerce industry. Online shopping is only so convenient (in some ways, it is less convenient), relative to brick-and-mortar shopping. For most consumers, is that convenience worth so many added fees and taxes?

Clearly, it won't be worth it to a lot of consumers.

Take the act of buying books, for example. If amazon.com begins charging sales taxes on its books, voluntarily or due to the actions of lawmakers, amazon.com loses quite a bit of its competitive advantage over Barnes & Noble or Borders or other large bookstores.

Currently on amazon.com, for most book purchases over 25 dollars, you can choose a free "Super Saver" shipping option. It just takes an extra day or five to receive your books than it might with a faster shipping method.

So, let's say that a couple of books at Barnes & Noble total 35 dollars. Throw in sales tax, and you add in a couple more dollars to the total. You are looking at 37 or 38 dollars. Meanwhile, if amazon.com can charge 33 dollars for the same two books, offers free shipping, and has no sales tax, you are saving 5 bucks.

But you have to wait a few days.

The wait, though, is worth it, usually.

Now, let's say that you have to pay 2 or 3 bucks in sales tax on amazon.com. Suddenly the smaller difference in price between Barnes & Noble and amazon.com may not make the 5 day wait worth it.

And yet, it may not be worth it to drive over to the Barnes & Noble to buy the book. Or it may just go to the backburner of things to do.

Book forgotten after a week. "I didn't need that book, anyway."

So the internet sales tax could stifle eCommerce. Instead of a book being purchased on the internet, no book is purchased at all.

But that's just books. As eCommerce matures and people begin buying more televisions, furniture, cars, and other high-end products online, 5 dollar differences suddenly become 500 or 5000 dollar differences.

Enough to make someone think twice about purchasing an item on the internet.

This internet sales tax scheme is just not good. Not good at all.

Government can and should learn to live with less if living with less means not stifling a growing sector of our economy.

And speaking of growth, currently, Apple's iTunes is exceeding expectations. People are actually paying to download music. Who would have guessed it? Over a billion songs have been downloaded at this point.

But the sales taxes iTunes charges are almost irritating enough to drive the average music downloader toward a music download website without sales tax surcharges. Maybe even a questionable offshore website, such as allofmp3.com, based in Russia. Not only are there no sales taxes on allofmp3.com, you can get an entire album for less than two iTunes songs. Is it legal to download songs from allofmp3.com? Who knows. It's definitely not illegal yet.

Having received an iTunes gift card for Christmas (25 dollars, maybe?), it was exceedingly annoying not being able to just buy twenty-five songs (at 99 cents each), or two full albums (at $9.99 each) plus five songs. Sales tax got in the way. Those dollars in sales taxes directly impacted the number of songs I bought.


For each dollar I paid in sales taxes on iTunes, I was unable to redeem my gift card for a song. That's got to add up, with all the millions of dollars of gift cards out there.

Why give people that extra incentive to opt for the suspect Russian website over the established American one?

Clearly this offshoring phenomenon will not be limited to music downloads. In the near future, companies based in other countries will sell all sorts of software, digital products (downloadable movie rentals, for example) and services, and easy-to-ship items (digital photo prints, for example) through the internet to American consumers, competing directly with American companies. And likely doing it cheaper, AND without any sales tax surcharge.

The internet sales tax is a terrible idea for American consumers, for American businesses, and for the American economy.

Local and state governments, however, love internet sales taxes, because they may help to recuperate some of the "lost" revenues suffered on paper:


But at what cost will the government recuperate those "costs," anyway?

I nearly chose not to buy that accessory kit for my shed when I saw the sales tax charge on my online bill. Just out of principle.

I could rig something up, after all. Or just go without. But I reluctantly went along, having quickly weighed the costs and benefits. In the future, though, as international shipping rates continue to plummet, I may just be able to buy the same accessory kit from an enterprising company based in Myanmar or Mongolia or Malaysia. If it's less expensive than the one from Home Depot online, why wouldn't I?

If we want to promote eCommerce in this country, let's drop the internet sales tax.


Posted by Will Franklin · 4 March 2006 09:10 PM


Maybe, we should call Algore to fix this for you. You know he invented the internet. He should be able to edit out all the sales tax packets.

Posted by: Eneils Bailey at March 5, 2006 11:33 AM

So who do they pay the sales taxes to? If I live in Houston, but drive to San Antonio to buy a stereo at Best Buy, does the Best Buy in San Antonio send the city and county sales tax back to Houston? Nope, they keep it.

Online retailers don't know where I am when I download my iTunes songs. What if I report that I live in Montana or Oregon? These states don't have sales taxes. Do their citizens have to pay sales tax on purchases made from their homes without leaving Montana over the Internet? And if they do, does Apple send the money back to Montana to help pay for education or roads or police officers on the street?

Sales taxes are enacted at a local level to support local programs. That is why there is no National Sales Tax. It seems that Apple is imposing either a National Sales Tax, a voluntary Internet Sales Tax, or they damned well better be sending the revenues back to my state. My tax dollar is not just thrown away, but is a dollar that I voluntarily give up by consent of the contract I make with my state Legislature and Government to pay for the costs necessary to keep my state running and provide for the general welfare of my local area.

So if the tax is not based on my State's taxes and the money returned to my state, is it based on the physical location of the server that houses the song, the location of the billing office of iTunes, the location of the artist that they are paying for the song, or perhaps some other arbitrary location that gets a huge windfall of money simply because Apple like charging taxes and giving the money to some random folks?

Posted by: Justin B at March 5, 2006 11:37 AM

I've had sales tax on some of the things I've bought at the same place and I have not been charged sales tax on other things? I wonder how they decide? AND, good question Justin! How do they determine what State it goes to?

Posted by: Zsa Zsa at March 5, 2006 12:11 PM

Here's how it works: If you buy online from a business that has a brick and mortar store in your state, you owe sales tax. Amazon will never collect sales tax, unless they start building brick and mortar stores.

The sales tax goes to the state in which you reside.

Posted by: rightwingprof at March 5, 2006 12:31 PM

Ah Ha!...Very interesting. I am glad to know that. Thanks, rightwingprof!

Posted by: Zsa Zsa at March 6, 2006 08:40 AM

Not quite correct - Amazon DOES collect sales tax from me, as I live in Renton (near Seattle). The sales tax is not restricted to if there is a B&M *store* in your state, it seems rather to be if there is a Brick&Mortar "presence".

It is quite annoying in the case of Amazon, since there are a decent number of things I end up ordering from them anyhow :(

Posted by: Adrian at March 6, 2006 02:01 PM