Leveling the field for local retailers
IN 1988, David Shaw started D. E. Shaw & Co., one of the first global investment management firms that used computers extensively. The company now has 1,100 employees and manages $30 billion.
One of his earliest employees did even better.
Jeff Bezos left the company at age 30 in 1994. The next year, Bezos launched Amazon.com, the online retailing behemoth that now has 97,000 employees and annual revenues of $61 billion.
This Wal-Mart of the Internet sells just about everything.
The company benefits from using warehouses and direct shipping, reducing its overhead both in bricks and mortar as well as the number of employees needed.
Customers can choose between price and convenience but governments in the 46 states that charge a general sales tax exaggerate that difference.
By not having to collect that sales tax, Amazon's price advantage grew by 6 percent in West Virginia over local retailers who must charge the tax.
That is because 21 years ago, the U.S. Supreme Court ruled that states cannot compel retailers to collect this tax if the company does not have a physical presence in that state.
For years, Bezos fought efforts to collect the sales tax, even going so far as moving or threatening to move facilities out of a state that tried to charge the sales tax.
But as more and more states seek to have online retailers collect the tax, Bezos has agreed to collect sales taxes in at least 13 states, including West Virginia, which passed a law that requires retailers to collect the tax from customers if the company has a physical presence in the state.
Amazon has a 70,000-square-foot customer service center in Huntington.
The law levels the playing field by eliminating an exaggeration to Amazon's price advantage.
Company officials announced they will begin collecting the tax on Oct. 1, three months ahead of the law and before the Christmas shopping season.
State officials expect to collect up to $10 million annually from West Virginians who buy from Amazon. Customers, not the company, pay this tax.
No one enjoys paying taxes, but applying the state sales tax to Internet purchases eliminates an unfair advantage for the online retailer that other state-based businesses did not have.