No doubt businesses that don’t have internet sales like the idea of sales taxes on interstate commerce. However, you seem to assume this will be good for those local businesses. That’s a big assumption. Why?
#1 More taxes means fewer sales. In other words, this isn’t likely to improve the economy. It will depress it.
#2 There’s a reason why states call them use taxes instead of sales taxes, because states are not constitutionally permitted to tax interstate commerce. In other words, use taxes tax the use of the items, not the sale. One way to get around this is to have the federal government collect the tax and then remit the proceeds to the states. Otherwise, this tax is unconstitutional.
#3 Sales taxes may have state, county, and local components. The compliance costs of keeping track of all these different rates and accounting for all the money will be a drain on economic activity.
#3 A lot of people probably like the convenience and better informed purchasing power of shopping from the comfort of their homes and don’t feel like having to drive somewhere to shop. Is it worth putting up with traffic, weather, etc. to save less than 10% on a purchase? Not necessarily.
#4 There are many products that don’t sell in nearly enough quantity to support local sales. For example, how many people need a door handle for a 50’s Chevy? Meaning? No local business is going to stock these items regardless. If fewer people purchase fewer of these items, they will be less likely to be manufactured.
I can think of only one advantage for this new tax. Government will suck more money from the free market. If anything, the states should be trying to cut taxes to be more competitive and improve the economy.
It’s mostly perception. Even with sales taxes added, the goods are cheaper online. But the states are still losing the money and they can make the case that it is stopping tax avoidance.
“Use” taxes are levied on non-real property (ie, other than real estate or land) that is used in business.
For example, when we ran a farm, we had to pay use taxes to the county annually on all my farm equipment. The equipment was listed when I bought it and put it “into production,” and the county had a depreciation schedule where the value of the equipment on the use tax rolls went down every year.
There were also sales taxes on ag equipment, but the state wouldn’t collect sales tax on equipment that was purchased out of state and delivered to our farm on a common carrier (ie, trucking line with an ICC #). But regardless of where we purchased property used in the farming operation, we had to pay use taxes.
Having the Feds collect “use” taxes will fund local counties about as well as PILT payment do.