Why Taxing Online Shopping Is Unfair

The hysterical lobbying for sales tax to be collected by online retailers reminds me of a story about two farmers on a dairy collective in the old Soviet Union.

Vanya and Vasili were farmers at the dairy collective. They both came to the collective at the same time, and were alloted the same amount of cows. All the cows on the collective grazed in the same fields and meadows. All the farmers drew water out of the same well. The farmers supplemented the grazing with feed purchased for them by the collective.The collective did well, and were able to purchase more cows the following year. There was even a little money left over that was divided among all the farmers, based upon their cows' production.Vasili used the money he received for his cow's milk to build a big house a heated barn. Vanya seemed to prosper too. However, he did not build a big house. Instead he and his family shared the barn with the cows, like they had the previous year.

Gradually, it came to be noticed that Vanya's cows always gave a little more milk. The calves were frisky and healthy. And the cream was said to be richest and sweetest of all the collective. Vanya with fewer cows earned almost as much as his neighbor. This was not lost on Vasili. He watched as Vanya's cows were led out every day by Vanya's wife, and brought back in every night by Vanya's children. His heart became small and hard like a stone.He became envious of his neighbor.

One day Vasili could stand it no longer. He stormed into the office of the collective, where Anya was entering the day's totals. “I cannot stand it”, he yelled. “It is not fair”.

“What is not fair, Vasili, inquired Anya mildly. “Vanya!” Vasili spat his neighbor's name. “What is not fair about Vanya?” Anya asked. Vasili's face contorted into a rictus of rage. “It is not fair”, he said repeated. “”I buy cows like Vanya. My cows graze same grass. My cows drink same water. Yet His cows give more milk! people say his cows give better milk-is richer, sweeter. That is not fair!”

”But”, protested Anya. “You have same kind of cows. You have more cows than Vanya. What you want me to do?” Anya was clearly perplexed at Vasili's fury. Vasili smiled evilly. “I want you kill his cows”.

All this is to say that brick and mortar stores have an advantage over online businesses. Customers can walk into the store, and try on any item on the premises. Customers can walk out immediately with their purchase. The customer pays sales tax as a condition of purchase.

Online venues do not enjoy that luxury. Many of us cannot afford to invest in a well-appointed boutique and inventory. We rely more heavily on the random kindness of strangers, and the algorithms of Google and Bing. We invest more heavily in advertising, in far more media outlets, as we do not have window displays that face out onto the street or the mall, where hundreds of shoppers pass by daily. Packaging is a greater investment. To entice business, many of us have to offer free shipping, even on returns, exchanges, or repairs which quite an expense given fuel prices today. We also have employees, contrary to popular myth. We pay inventory tax. The overhead may appear to be less, however the mark up is not as generous.

In conclusion, the argument that tax-free online shopping for customers puts the physical stores at a financial disadvantage is specious at best, and mendacious at worst.
Beadbear
http://www.beadbear.com