What's This About Amazon Dying?

When you think about ginormous book retailers, one of the first that naturally comes to mind is Amazon. So the headline on this article in The Huffington Post sort of took me aback--like, what do you mean Amazon's dying?

The article was written by indie bookstore owner Alex Green. (So could this Amazon dying thing be wishful thinking?) He says Amazon's business model is too dependent on not paying sales tax. The problem is the law may be turning against the company on this issue.

Green argues that Amazon can't survive under its current business model, if forced to pay sales taxes. He claims: "If nationally enacted today, enforced tax legislation would put at least $1 billion of Amazon's yearly operational costs and profits into state coffers. Under such pressure, Amazon would briefly comply and then collapse. Three weeks later you would find them on the nightly news, appearing before Congress for a bailout, 'selling,' as the poet Franz Wright says, 'the emptiness of their own hands.'"

And Green says the trend toward states requiring online retailers to pay sales tax is increasing.

Hmm . . . could this really be? Could Amazon be brought to its knees by having to pay sales tax? Here's a question: Wouldn't Amazon get a grace period for compliance? And what about charging the consumer to make up the difference? And (when you come down to it) how can the state expect to get money that isn't there? I mean, it's one thing to have a judgment, a whole 'nuther to collect on it.

Plus you'll notice the qualifier "if nationally enacted"--big "if." Sales taxes are imposed state-by-state. Green does mention the Commerce Clause and suggests it may be violated by exempting online retailers from sales tax. But it's an arguable position, so it's not a given that Amazon will have to comply with a nationally-imposed sales tax requirement.

Okay, that was more than one question, plus a few opinions. In any case, it's an interesting article. And while I may have ambivalent feelings about Amazon, I wonder--could the sales tax issue really be its downfall?