The Internet Sales Tax: What to look out for.

May 6th has come and gone, and with it the passage of the internet sales tax through the US Senate. Getting an idea of how your investments may be affected by its passage is critical, particularly if you invest in companies with a distinct online retail element. It’s not too late to take a look and make some adjustments. The bill itself is a proposal to institute an across-the-board tax on all online sales for online retailers as a means of better regulating online sales and bringing retailers such as Amazon, back in line with their physical-store competitors who have been paying taxes on all their sales, while internet retail giants haven’t been shelling out anything of the sort since their inception.


This will also affect smaller businesses as well; the cutoff having been set at $1 million in gross margin, but many of the smallest businesses affected won’t be trading publicly regardless. Rather, the most distinct players will be the online retail giants, as well as big-box stores in the short-term future.  Keep an eye out for physical retailers such as Best Buy (who have been jokingly known for quite some time now as, “Amazon’s showroom”) playing a bit harder with some of their more expensive items. While companies such as Amazon and Wal-Mart have been proponents of this proposal, they’ll also be among those hit the hardest by it, though more often than not they have the funds to spare. Where it seems like it will be damaging in the short-term, it will hardly cause too much of a stir—rather, keeping an eye out for speculators and their impacts on the stock prices will be the larger factor. The most likely effect if this bill passes through the House, is driving prices up for smaller retailers who may let go of some of their more expensive merchandise, and thereby driving more customers to the larger retailers who can take the extra hit and who may end up with a better overall outlook.


While the internet sales tax may cause a bit of a dip in the short term for publicly traded online retailers, what this effectively accomplishes in the arena of the internet marketplace is, while hardly negligible, minimal. It’s not only important to know when to buy and when to sell, it’s also utterly imperative that you have an idea of when your stocks may be taking a temporary—or prolonged—dip, and how those factors will continue to affect their business well into the future. If your portfolio or your business has been hit by this, get in touch with an advisor or financial consultant to ensure that you’ll be able to not only keep your head above water, but to keep turning a steady profit.


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