Why You Should Care About The Main Street Fairness Act

Just looking at its name, you would never guess that The Main Street Fairness Act has to do with online commerce, but it does. Not only will it increase the cost of online shopping, it may change the way companies like Amazon do business.

The Main Street Fairness Act is a bill being prepared by Dick Durbin (D-Ill.). It will turn e-commerce upside down by forcing online companies to charge a state sales tax on each purchase. This may sound silly to countries that already tax online purchases, but in the US, you can buy stuff online and not pay any extra taxes.

States have pushed for these online taxes for years. Recently, the Texas legislature passed a bill requiring retailers to collect a tax if they run a distribution facility in the state. Amazon got wind of this legislation and threatened to close its Dallas shipping center, fire its Texas employees and move completely out of the state. Afraid of losing Amazon, Governor Rick Perry vetoed the bill. The retailer blocked a similar measure in South Carolina.

Amazon may be winning some of these state battles, but it's in a war the retailer can't win. Eventually, the federal government will pass a law mandating the collection of online sales tax. When that happens, Amazon will be forced to tax customers on every purchases. Customers may kick and scream, but there could be an unintended benefit to this change.

Amazon has been selective about its distribution centers, placing them in states that are strategic to shipping as well as friendly on taxes. If the sales tax issue is removed from the equation, Amazon could build distribution centers all over the place. Overnight shipping prices could drop even lower, shipment cut-off times could be extended well into the night and even same day delivery could be possible in some locations.

Yes, we would be paying more at Amazon, but even with the increase Amazon prices are still lower than the brick and mortar store down the street. It would also be sweet to order a book at breakfast and have it on your front door by dinnertime. [Business Week]