Thursday’s 5-4 ruling allows states to collect sales tax even from online retailers that don’t have a physical presence in the state. That eliminates a loophole that has helped internet shopping swell to a major force in the U.
An Amazon spokeswoman declined to comment on the ruling. “This ruling clears the way for a fair and level playing field where all retailers compete under the same sales tax rules whether they sell merchandise online, in-store or both.
President Donald Trump praised the Supreme Court’s online sales tax decision on Thursday, but analysts said the ruling may have only a marginal impact on his frequent target Amazon.
"Big Supreme Court win on internet sales tax – about time" Trump tweeted hours after the ruling handed a victory to states seeking a new revenue stream from online retailers. “Big victory for fairness and for our country. Great victory for consumers and retailers.”
The president’s words echoed his past accusations that Amazon’s rise to one of the nation’s biggest retailers is harming local governments and traditional retailers alike. “Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt – many jobs being lost!” Trump tweeted in August.
Thursday’s 5-4 ruling allows states to collect sales tax even from online retailers that don’t have a physical presence in the state. That eliminates a loophole that has helped internet shopping swell to a major force in the U.S. economy but has brought much grumbling from brick-and-mortar retailers.
Amazon’s stock price was down 1.1 percent Thursday as traders reacted to the Supreme Court decision. But financial analysts say the e-commerce giant may not feel much pain. The Seattle-based company, which has distribution centers scattered all over the country, already collects sales tax in every state that has one.
The real rub for Amazon comes with its third-party sellers, who use Amazon’s platform to hock their own wares. It’s a significant part of Amazon’s business, and many of these sellers have not been required to collect state sales taxes, so the cost of their goods is now likely to rise.
But even then, Amazon may be cushioned by the fact that it’s so well established in the market.
“Most consumers use Amazon for convenience, selection, service and Prime, not to find the lowest prices,” said Colin Sebastian, senior equity research analyst for Robert W. Baird & Co.
“That shouldn’t impact Amazon at all, and may make first-party items more competitive with third-party items sold on the site,” said Michael Pachter, managing director of equity research at Wedbush Securities.
An Amazon spokeswoman declined to comment on the ruling.
Trump has repeatedly criticized Amazon to his millions of Twitter followers, often conflating the online retailer with The Washington Post, which is personally owned by Amazon’s billionaire CEO, Jeff Bezos.
The president has often accused Amazon of ripping off governments by not paying taxes. The president falsely asserted on March 28, for example, that the company “pays little or no tax to state & local governments."
He’s also alleged the company gets cheap shipping rates from the U.S. Postal Service. Trump created a task force in April to look at the agency’s financial losses and consider changes to its business model.
Crafts marketplace Etsy said Congress should take the opportunity to pass a law to streamline online sales tax collection nationwide, to circumvent a potential mishmash of state requirements.
But the National Retail Federation, which represents brick-and-mortar and internet retailers as well as grocery and restaurant chains, celebrated the Supreme Court ruling as a market equalizer.
“Retailers have been waiting for this day for more than two decades,” NRF President Matthew Shay said in a statement. “This ruling clears the way for a fair and level playing field where all retailers compete under the same sales tax rules whether they sell merchandise online, in-store or both.”
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