February 06, 2014 08:30 AM UTC

A Better "Amazon Tax?"

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• by: Colorado Pols

As the Durango Herald's Joe Hanel reports:

Democrats are back with another attempt to tax Internet sales, and this year, they are confident the courts will be on their side.

The so-called “Amazon tax” has roiled the Legislature for the last five years. Colorado passed an Internet tax law in 2010, but its status has been uncertain after it was thrown out by a federal judge, then reinstated and currently is the subject of a new lawsuit that seeks to block it again.

Colorado isn’t alone in trying to impose taxes on Internet sales. States got a big boost in December when the U.S. Supreme Court declined to review a New York law passed in 2008 to tax companies such as Amazon.com…

“It’s really simple. Our brick-and-mortar businesses are being undermined,” [sponsoring Rep. Lois] Court said.

Supporters include the Colorado Retail Council, a lobbying group for local businesses.

Here's the full text of the Marketplace Fairness and Small Business Protection Act as introduced.

The fight over collection of Colorado's standard state use tax of 2.9% for online purchases has raged in the Colorado legislature, and on this blog, for a number of years. As Hanel reports, Colorado passed a bill in 2010 meant to push online retailers to remit this tax, more or less by imposing an onerous paperwork requirement if they didn't. That law was ruled unconstitutional in 2012 by a federal judge, whose ruling was then overturned on appeal. The court battle over that law continues, but as Hanel reports, House Bill 14-1269 could render the issue moot.

In the time between passage of the 2010 "Amazon Tax" and today, the question has shifted at least rhetorically in favor of taxing online purchases, with large online retailers like Amazon expressing a new willingness to remit taxes in a "fair" manner. Federal legislation has been introduced to create a nationwide system for sales tax collection on online purchases, but like so many agenda items in today's paralyzed Congress, its status today is "uncertain."

But the bottom line hasn't changed: business groups like the Colorado Retail Council support collecting tax on internet sales because local retail has been severely impacted by the switch to tax-free online buying and selling. Not only has it hurt brick-and-mortar local businesses, the state and local communities are deprived of revenue. It can't–and shouldn't in a free market–be undone, but there's nothing radical about trying to level the playing field. In fact, claims that these laws are "anti-business," generally from Republican lawmakers, could not be more wrong. This is pro-business.

That is, pro local business. Now that this is becoming a more prevalent attitude nationwide, it will be interesting to see if House Bill 1269 gets a better reception from Amazon's many previous defenders.