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Gizmodo.com has a cheeky, to-the-point piece explaining why Amazon is supporting federal legislation that would allow states to force online retailers to collect sales taxes, something that it fought for a long time.

Some excerpts:

• "Isn't Amazon screwing itself over by supporting the legislation? Why no, no it's not! Sure, the tax-free party it's been enjoying for the past 21 years was a great business strategy for a while, but times are changin'. Most people these days are united by at least two factors: an irrational demand for instant gratification and a desire to have as little face-to-face interaction with other people as is humanly possible.

"So to keep up with our whiny, misanthropic ways, Amazon has installed same-day, one-click delivery in 10 cities across the country. Same-day delivery means huge, fully stocked warehouses. Warehouses mean obeying state tax laws. And the heavy populations in the places getting the service will almost always mean a state sales tax.

"So with these additions, Amazon's days of skirting the IRS are coming to a close. Rather than find another way to sneak around the sales tax rules, its lawyers and lobbyists have opted to make damn well sure that everyone else is going down with them. Or as they chose to frame it, create 'an even-handed federal framework for state sales tax collection'."

• "With the rate we as a nation have been growing increasingly dependent on online shopping, those extra dollars spent are going to add up quick. Long story short: it's going to make your life a whole lot more expensive.

"It's not just going to hurt your wallet. The diversity of the marketplace could get slashed as well. As individual sellers with retail aggregators like eBay and Etsy decide the tax hike isn't worth the time it takes to carefully craft their cat hair necklaces, they'll start taking down their online stores. And YOU'LL never get to know the joys of wearing metal balls of cat sheddings around your throat."
KC's View:
I'm not sure I totally buy the argument that the internet will get less diverse. As they say in Jurassic Park, life finds a way. There have been hundreds, maybe thousands of predictions over the years about how the big retailers are going to squash the small retailers. Hell, when I first started writing about this business, all the predictions were that Cub Foods was going to take over the planet; Cub is still around, but it didn't exactly make everybody else extinct. Despite its best efforts, neither has Walmart. Good, aggressive, differentiated retailers tend to survive, no matter what their size.

I do think that by embracing the ideas of collecting state sales taxes, Amazon puts itself in a position where its Marketplace program - which allows third party retailers to sell on Amazon - begins to look at lot more attractive to other online retailers, since Amazon will be able to apply whatever algorithm it is using to calculate sales taxes to their transactions as well.

Interestingly, there also was a New York Times story over the weekend in which a number of smaller internet retailers complained that it has taken this long to get legislation that world force Amazon to collect sales taxes; Stacy Mitchell, a senior researcher with the Institute for Local Self-Reliance, is quoted as saying that it is "beyond frustrating that Congress waited until Amazon became so dominant that having a massive tax advantage is no longer essential to its strategy. The right time to fix this was a decade ago, when it could have saved many local businesses.”

I can understand her frustration, but since she's with the Institute for Local Self-Reliance, may I suggest that whining about the realities of the marketplace isn;t the best way to be competitive. The best way is to understand what Amazon's undeniable advantages are, and then work like hell to make sure that you define your own advantages, exploit them, build on them, and compete in the areas where you do stuff that Amazon can't do. It is not a guarantee that you'll succeed, but it is a lot more likely to be fruitful than wishing that Amazon would be brought down to earth by federal or state legislation.

There is no constitutional provision saying that everybody gets to succeed. Only that, given the right circumstances and resources, you get to compete.

Rely on that.