According to the Wall Street Journal, Wal-Mart, Target, Sears, Home Depot and Best Buy have joined the Alliance for Main Street Fairness, a coalition reportedly originally comprised of mom-and-pop stores that believe “Internet merchants that aren’t legally required to collect sales taxes enjoy an unfair advantage with shoppers.”
“The rules today don’t allow brick-and-mortar retailers to compete evenly with online retailers, and that needs to be addressed,” said Raul Vazquez, Wal-Mart’s executive vice president of global e-commerce.
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“We’re seeing an increased urgency from states trying to make up for lost revenue,” said Laura Bishop, Best Buy’s senior director of government relations. (WSJ)
The Alliance for Main Street Fairness was reportedly born in 2010; Amazon is the bulls-eye in its target. There is nothing on the organization website about its membership or leadership. No names (not of staff, board or members). No info on joining. No history.
However, on Friday the organization celebrated the implementation of a new California law that requires online retailers like Amazon and Overstock.com to collect sales taxes on purchases by California citizens. As a result, Amazon terminated its contract with hundreds thousands of California associate businesses.
I ask you: did a single story about Amazon cutting off California associates mention Wal-Mart as the driver for this legislation? Doubtful. Most didn’t even acknowledge that Californians are obligated to pay the missing tax! (It’s a use tax when paid by the citizen instead of collected by the retailer.)
This FOX News blurb mentions that Best Buy and Wal-Mart criticized Amazon’s “unfair advantage” but says not one word about their role in advocating for the legislation.
Behind The Scenes: Terry Nelson, Architect Of 2005 Wal-Mart Astro-Turf Campaign
Wait. There’s more. Al Norman has traced the Alliance for Main Street Fairness to former GOP White House aid Terry Nelson:
Nelson has the unique distinction of being tied to two of the biggest cases of Republican campaign corruption in the Bush era. Nelson was implicated in the infamous New Hampshire phone-jamming scandal and he was an unindicted coconspirator in the political money-laundering case which ended Tom DeLay’s career. (TPM; more from SourceWatch)
In 2005, Wal-Mart hired Nelson to create an astro-turf campaign, “Working Families for Wal-Mart.” Wal-Mart fired Nelson’s firm in 2006 in the wake of a racially and sexually-charged ad he developed for the Tennessee U.S. Senate race. The ad featured Harold Ford, Jr. and a blonde woman: “I met Harold at the Playboy Party! Harold, call me sometime.” The ad ended Nelson’s tenure in that campaign, but now he’s back.
Wal-Mart As “Main Street” Business? Turn On Your Irony Detector
The Sacramento Bee [1] wrote about the irony of Wal-Mart driving this campaign:
Amazon no doubt has taken business from bookstores. But no retailer has had a worse impact on Main Street business than Wal-Mart, its role in the Alliance for Main Street Fairness notwithstanding.
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Rummage around Walmart.com, and you’ll find you can buy items from a variety of Wal-Mart affiliates. One is CSN Stores. It happily proclaims that “one of the best things about buying through CSN Stores is that we do not have to charge sales tax.”
Seattle’s GeekWire reports that the promised increased tax revenues haven’t materialized in Rhode Island, one of the handful of states that have passed sales tax laws on internet retailers.
The average annual loss [to internet retailers] is equal to 2.5 percent of the state’s total sales tax collections in 2007.
But the state law has done nothing to increase tax revenue. Officials at the R.I. Department of Revenue “do not believe that there has been any sales tax collected as a result of the Amazon legislation,” said Paul L. Dion, who heads the department’s revenue-analysis office… “The only thing that Amazon has changed because of this policy is they’ve stopped paying companies in the state. … The reality is we haven’t gotten the revenue or the policy benefits out of this, but we do have this downside.”
Angus Davis, a tech entrepreneur who lives in Providence, said the law should be called an “affiliate tax” since it has no impact on Amazon. “It’s really slamming the door shut at the borders of Rhode Island to any kind of online advertising industry,” he said.
Lydia Walshin, who lives in Scituate, depended on Amazon affiliate marketing to monetize her cooking blog, ThePerfectPantry.com. After Amazon cut off its affiliates, Walshin moved her operations to Massachusetts, where she also has a home and a bank account, and Amazon had her back up and running within 24 hours.
Battle For Sales Tax From Non-Resident Businesses Predates eCommerce
The push for online retailers to be treated like bricks-and-mortar stores is older than the Internet; it started with catalog retailing! From a 1986 analysis of taxation of mail-order catalog sales (pdf):
What appears to be a fairly narrow conflict between tax administrators and mail order merchants is, in reality, another manifestation of the conflicts inherent in our federal system of government — a classic conflict between the national interest in protecting the free flow of interstate commerce from unreasonable imposition of state and local taxes, and the rights of individual states to protect the integrity of their taxing authority and their revenue system.
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Avoidance or evasion of the sales or use tax is frequently not the primary or even a major reason for choosing mail order rather than a local retailer.
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For 25 years, states have sought to broaden the array of firms liable to collect state sales and use taxes.
From a 2003 USA Today small business Q&A:
The rules are the same for Internet sales and catalog sales: you have to charge and collect sales tax when you deliver the product to a state in which you have a “physical presence.”
But we (consumers) don’t pay these use taxes, primarily because most of us don’t know that we are supposed to do so. Here are sample instructions for Utah residents.
The 2011 movement to tax ecommerce represents classic behavior of incumbent organizations (Wal-Mart, Target, Sears, Home Depot, Best Buy) responding to a “competitive threat” by running to the legislature for relief from competition. (See Brian WInston, Media Technology and Society: A History From the Telegraph to the Internet)
Legislators Ignore Long-Term, Systemic Issue, Turn Blind Eye To Wal-Mart’s Legacy
There are systemic issues in a revenue system that is predicated on citizens spending (versus saving/investing) in order to perpetuate government services. This is the same thing that happened when citizens shifted household waste from “garbage” to “recycling.” The resultant decrease in the volume of material going to landfills led to in a drop in revenue at solid waste processing facilities. This is what is happening to gas tax revenues, which support road maintenance, which are flat or dropping as Americans curtail driving in response to rising fuel costs.
We must rethink both our tax system and our public services. Instead, state legislators are crawling in bed with organizations of questionable virtue in order to perpetuate a broken system.
This “lets tax Amazon” movement is a unholy alliance between cash-strapped legislatures dependent on regressive sales taxes and mega-corporations intent on hamstringing a competitor [2]. It is an emotional call, not a rational one; even if Amazon were to continue its relationship with associates (the “nexus” in the California bill), the total increase in taxes collected in California would be less than 2 percent of the budget package.
The irony of Wal-Mart — California’s number one retailer for employees who need food stamps and publicly-funded health care [3] — presenting itself as a “main street” business should make the Democrats who have sided with the giant gag. But they don’t gag — do they even hold their collective noses? Yes, this is worse than watching food processors make sausage and hot dogs.
And media silence on this alliance? Perhaps this is further evidence that corporate media don’t like internet competition any more than other oligarchies.
Color me disgusted… and reminded (yet again) of underhanded corporate tactics envisioned in Ayn Rand’s Atlas Shrugged.
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[1] The Sacramento Bee is a McClatchy newspaper. McClatchy seems to be one of the few newspaper groups that still speaks truth to power; it owns 30 daily newspapers.
[2] The hamstringing claim assumes that you believe people choose to buy online to save sales taxes; I have seen no data to support the claim. For example, I buy online for convenience and pay sales tax on every Amazon purchase because I live in Washington.
We estimate that Wal-Mart workers in California earn on average 31 percent less than workers employed in large retail as a whole, receiving an average wage of $9.70 per hour compared to the $14.01 average hourly earn- ings for employees in large retail (firms with 1,000 or more employees). In addition, 23 per- cent fewer Wal-Mart workers are covered by employer-sponsored health insurance than large retail workers as a whole. The differences are even greater when Wal-Mart workers are compared to unionized grocery workers. In the San Francisco Bay Area, non-managerial Wal-Mart employees earn on average $9.40 an hour, compared to $15.31 for unionized gro- cery workers—39 percent less—and are half as likely to have health benefits.
At these low-wages, many Wal-Mart workers rely on public safety net pro- grams—such as food stamps, Medi-Cal, and subsidized housing—to make ends meet. The presence of Wal-Mart stores in California thus creates a hidden cost to the state’s taxpayers.
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- Reliance by Wal-Mart workers on public assistance programs in California comes at a cost to the taxpayers of an estimated $86 million annually; this is comprised of $32 million in health related expenses and $54 million in other assistance.
The families of Wal-Mart employees in California utilize an estimated 40 percent more in taxpayer-funded health care than the average for families of all large retail employees.
The families of Wal-Mart employees use an estimated 38 percent more in other (non-health care) public assistance programs (such as food stamps, Earned Income Tax Credit, subsidized school lunches, and subsidized housing) than the average for families of all large retail employees.
If other large California retailers adopted Wal-Mart’s wage and benefits standards, it would cost taxpayers an additional $410 million a year in public assistance to employees.
Known for gnawing at complex questions like a terrier with a bone. Digital evangelist, writer, teacher. Transplanted Southerner; teach newbies to ride motorcycles. @kegill (Twitter and Mastodon.social); wiredpen.com