Your Amazon.com purchases should be taxed

By Ezra Klein

Good column by Farhad Manjoo on the way Amazon.com -- and other online retailers -- have a tax advantage against brick-and-mortar stores that have to pay sales tax, and also on the way Amazon and others try not to tell anybody about that tax advantage because they fear having it taken away.

But it should be taken away. When you have a tax, you want the base as broad as possible so that the rates can be as low as possible. The exception is when you're using the tax to discourage something, rather than just raise revenue. But the point of the sales tax isn't to kill off brick-and-mortar retailers and drive commerce online. It's to fund state governments. And right now, state governments are losing more than $7 billion a year because online purchases don't get taxed, and that number is going to keep growing as more and more purchases get done online, in part because they're exempt from sales taxes.

And as they say on the infomercials, that's not all! This is making an already regressive tax even more regressive. Sales taxes hit low-income residents hardest because they spend a higher percentage of their income. And online purchasing is more common among the affluent than among the cash-strapped. So you've got fewer affluent people paying sales taxes, which means more states with big holes in their budgets. And what do states do when they've got a big hole in their budget? raise the sales tax, of course. And who's left paying that increased sales tax? Lower-income consumers, mainly.