The Supreme Court announced it will not hear a case involving an internet sales tax. Amazon and Overstock .com were appealing the online levy imposed in New York State, but it's a battle with national implications.
CBS News contributor and analyst Mellody Hobson told the “CBS This Morning” co-hosts that she believes this means “the online price differential that online retailers get is probably going to go away.”
“That differential was really about tax. They will now be on par with the brick and mortar retailers and they won’t have that edge that they’ve had,” she said. “We’ll probably see less show rooming, where people go to a store, they’ll look around and pull out their mobile phone and buy the item online.”
Hobson also said that businesses and shoppers are going to see “a lot more bureaucracy.”
“Figuring out these tax rates by state, by municipality, (it's) so hard, so complicated,” she said. “They are going to be dealing with a very tangled tax web.”
The potential tax revenue that these states would lose is huge and the governments are saying that they need the revenue.
Hobson explained that taxes are especially important after the financial crisis.
“Cities need roads, bridges, money for schools,” she said. “We spend an average of $600 million on the web a day, so if you put a four-percent tax rate on that, that’s about … $23 billion a year that’s not being collected.”
Amazon already collects tax in 16 states, including New York and Calif., but there are still a lot of states out there, especially in the Midwest, where they are not paying a tax. Hobson said that “no one is counting” on Congress stepping in to help police the situation.
“I talked to a former very senior person in the finance area of Amazon, they wanted this national e-commerce tax for one specific reason, they thought it would be lower than what they would pay at the state and national level and that would keep their competitive advantage around price.”
Hobson said that the price differential given to the online retailers really made a difference, which is why brick and mortar establishments were fighting for different tax laws.
“Let’s just take New York City, (where) your tax rate is just under nine percent all in, if you’re going out and buying a larger item - a flat screen television, you’re doing all of your Christmas shopping, et cetera – that makes a difference. That’s another gift. That’s real money.”