Click and Tax

Most Americans have yet to wholly switch from bricks to clicks for their shopping. Online purchases make up only about 2 percent of retail sales. That may seem small, but last year it translated into some $73 billion in consumer goods bought off the Web.

And a portion of those big bucks is in big demand by cash-strapped state governments.

Enter retail giants like Wal-Mart and Target, both of which have growing sales online. Last week, they started charging online customers the same sales tax that in-store shoppers pay in each state.

Big-name stores have a strong incentive to make this switch: Customers who return an item bought online to a bricks-and-mortar store sometimes get a refund that includes the sales tax they didn't pay online.

In imposing a tax, most big chains can likely absorb the loss of online customers who will shop elsewhere. But smaller Internet start-ups may have a rougher go if they follow suit.

Congress, which so far has hinted that to foster Internet commerce, it prefers states not to impose sales taxes on Web purchases, will need to look at legislation that applies consistent rules for the larger Web marketplace.

A complicated tax structure, different from state to state and from city to city, makes the effort to charge sales taxes of smaller online businesses especially difficult. The Supreme Court has recognized this burden.

Web shopping still needs more time to grow. But more importantly, Congress should provide some incentives for states to agree on ways to simplify all the different sales taxes as they would apply to Net purchases. Then both consumers and online stores will be able to operate on a fairly level playing field.

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