eBay Inc (EBAY), Macy’s, Inc. (M), Amazon.com, Inc. (AMZN): The Online Sales Tax Battle

Proponents of the sales tax like Amazon.com, Inc. (NASDAQ:AMZN) argue that just as many consumers are willing to pay a small surcharge to easily use eBay’s PayPal service, so will the sales tax most likely be a small payment to streamline sales taxes nationally. This is instead of companies having to wrangle with individual states in courts across the U.S.

The paradox is that Amazon is willing to pay more taxes because it wants higher profit margins.  But, Amazon is willing to sacrifice some profit margins over the next few years in order to beat out its competition over the long term. Amazon.com, Inc. (NASDAQ:AMZN) is willing to lose a battle to win the war, but eBay Inc (NASDAQ:EBAY) would rather stay content with the way things are currently.

Conclusion

If the online sales tax gets passed, expect smaller earnings/profits from online retailers for the first two or three years after the tax is put into effect. Big-box retailers would be able to see some superficial shallow gains, if any, from the new tax.  Macy’s, Inc. (NYSE:M) will be able to benefit from the company’s new game plan strategy, and large online retailers like Amazon.com, Inc. (NASDAQ:AMZN) and eBay Inc (NASDAQ:EBAY) will be able to gain a competitive advantage over their competition.

Small businesses and individuals engaged in online retailing will probably see some small price increases as the impact of the sales tax trickles down to the individual consumer. But, due to the dynamic nature of the online marketplace, online retailers would be able to not only recover but far exceed expectations after the companies have recuperated from this additional tax burden.

The article The Online Sales Tax Battle originally appeared on Fool.com.

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