Regressivity of taxing internet sales

North Carolina was trying to tax Amazon and other internet vendors on the nexus of commissions they paid local people who linked to the out-of-State company that made sales from those links. Amazon and Overstock are cancelling those commission deals and proclaiming we can’t touch them. That preposterous “no nexus” dodge, based on the legislative power of the Supreme Court, is a topic for another day, maybe, but the claim that taxing internet sales is regressive is worth a moment. That claim is often made without analysis, as in http://forums.slickdeals.net/showthread.php?t=794298 and http://www.bluenc.com/amazon-sucks (“new or added sales taxes are regressive”).

Well, sales taxes in general are regressive. Taxing salt, for example (see http://en.wikipedia.org/wiki/Salt_Satyagraha), is way on up there. But not all sales taxes are regressive: what is a luxury tax other than a sales tax?

About internet sales, I'm not buying the regressivity argument. The kinds of things I buy via the internet are not necessities. Those things have a high value to weight ratio, not the characteristic of most necessities. Food, for example, is a necessity, but food ordered over the internet will tend toward expensive, luxury items. (Prescription drugs are a necessity and cut the other way, but they must make up a small fraction of internet sales.)

There’s some interesting data from 2008 at http://blogs.zdnet.com/ITFacts/?p=14001, which says that of folks who had bought online then, 19 percent had incomes over $100k, while 13 percent had incomes below $25k; of folks who had not bought online then, 7 percent had incomes over $100k, while 19 percent had incomes below $25k.

I don’t know enough about regressivity to make much of a conclusion. Amazon probably has a lot of data – ZIP codes would tell a lot – about the demographics of its customers, but I’m not holding my breath for disclosure.

Anyway, if you don't have a fixed address, computer access (OK, the library can supply that), internet literacy, and a credit card, I don't see how you can buy stuff over the internet.