Taxing online purchases

There's a conversation on the Sisters in Crime discussion list about Amazon and sales taxes.  One poster wrote:

the great question is why some, many think the state is entitled to these 'extra' revenues.  The company who ships the product to you is not taking advantage of any of the services of your state.

I've just posted this reply:

Lawyers on this list should answer this question, because they'd do a better job than I will.  But the word here is "nexus" -- an outpost, a facility, a brick & mortar element within a state.  That's what entitles the state to ask a merchant to collect sales tax.

So the issue here is not a matter of "extra" revenue or "new" taxes.  It's whether existing, well-established law applies to Amazon and other online merchants.  If Amazon has warehouses in your state, that seems like a pretty obvious nexus.  If Amazon has affiliates in your state, is that a nexus?  It's a debatable question, but Amazon seems to be taking the position that affiliates count as nexus because it withdraws its affiliate program from states that ask for taxes.  More interestingly in this internet era, does the hosting a website or a blog within a state count as nexus?  (How many of us could say for sure where our websites are housed?)

The California settlement isn't a capitulation -- by either side.  It's going to be interesting in this anti-federal moment to see whether the federal government will step up the way that Amazon is asking it to.  At the debate last week, a GOP candidate proposed a national sales tax system.  Anyone think that either Amazon or Herman Cain will get what they want?

I will add just one thing: the notion that an out of state merchant is not taking advantage of "any of the services of your state" seems to me to be to be an extreme position.  For example, state and local government pay for most of the cost of the roads that those products travel on.  State and local government respond if the vehicles that transport your purchases are involved in accidents.  (And there sure are more delivery vehicles out on the roads these days!)  If you shop over a cable modem, your local government was involved in the provision of that service (through regulation of the lines).  In some areas -- not where I am now, but in other places I have lived -- local government might take care of all the trash and/or recycling that results from all the extra packing used in shipping a product to you.  (No bringing your own tote when you're shopping online!)  If you have problems with your purchase, your state government offers consumer protections that the merchant probably hopes you don't take advantage of.

You can argue that state and local governments that are supported by sales taxes should not do any of these things.  But taking the position that Amazon does not benefit in any way from the existence of state and local governments seems a little over the top, no matter how fashionable that position is today.