When Amazon.com announced its decision to tax all items sold directly by the company, effective Sept. 15, dedicated Amazon customers everywhere bemoaned this new law. Gone were the deals on textbooks, bulk food and electronic appliances that had all been significantly cheaper than in-store prices.
Previously, Amazon had only been able to avoid charging a tax on its customers in California thanks to a loophole that began in 1992, when the U.S. Supreme Court ruled that states had no power to collect taxes from companies not physically present within that state. And as the practice of online shopping expanded along with the Internet, websites like Amazon continued to evade collecting sales taxes for the state.
By 2011, though, Gov. Jerry Brown signed a measure requiring Amazon customers, along with other online retail buyers, to pay a sales tax on its products. In return for a year’s reprieve, Amazon has promised to create at least 10,000 full-time jobs for Californians by adding two in-state fulfillment centers, one in San Bernardino and the other in Patterson.
Thus, although this decision may appear as an unnecessary annoyance and hindrance, the new required sales tax may play a fundamental role in reinvigorating the state’s economy.
Not only will job opportunities open, a change dearly welcomed in a state with a rising 10.6 percent unemployment rate, California will also earn an additional $200 million annually from online sales taxes alone.
Traditional brick-and-mortar stores are celebrating this newly implemented tax, whereas before these stores often served as “showrooms,” in which a customer browsed through their products in store but ultimately bought the item online tax-free. Now, with online retailers like Amazon losing their competitive edge, the gap has been lessened.
And even though faithful Amazon shoppers may feel that they can no longer escape the dreaded 8.5 percent sales tax in California, another agreeable outcome looms on the horizon: same-day delivery, an upgrade from the current minimum of one business day shipping, because Amazon’s warehouses will be closer and more convenient.
All is well—now every business can play by the same rules. Meanwhile, California can utilize this law to help cut its deficit and lower the unemployment rate. That’s a win-win situation.
