It’s hard enough to afford living in New York state with residents already paying the highest combined tax burden in the nation. Even in a region surrounded by high-tax states, New York is the most unaffordable.

Instead of facing up to the role state government has played in driving up these burdens, Gov. Andrew Cuomo’s budget proposal wants to use yet another new, complex tax scheme to loot hundreds of millions of dollars from New Yorkers’ wallets.

The new regulations proposed by Cuomo force “online marketplaces” with a value over $100 million to collect and remit sales taxes.

That’s code for new tax obligations, since at this point pretty much everyone – 80 percent of Americans and climbing – are online shoppers.

This policy will also hit countless small businesses in New York who sell items on these platforms. In addition to making the lives of struggling New Yorkers more expensive, and the state even more unattractive to businesses.

New York residents, many of whom live in remote areas far from big retail centers, would have to pay more when they shop online.

In the governor’s proposal, marketplace providers including eBay, Etsy and Amazon will be the ones playing tax collector. By requiring them to collect sales tax on every single sale made to a New Yorker through those platforms – even if the seller has no property or employees in the state – they will make selling to New York a compliance nightmare.

This complicated mess of tax-collection rules will make them less likely to want to sell to New York residents in the first place. It will mean less competition, and fewer options for consumers.

Further, the burden of being forced to play tax collector for the state is harsh punishment for companies that have helped open worldwide opportunities for New York-based small sellers.

Those lobbying for the policy say it would “level the playing field,” and aid struggling mom-and-pop businesses. In reality, the playing field is already level.

Under current rules, all businesses with property or employees in New York state, whether they are brick-and-mortar or web-based, already collect the state’s sales tax.

This common-sense standard treats all sellers the same. That’s why Amazon already collects for sales in New York, because its in-state distribution centers give it a physical presence. The Supreme Court’s decision in 1992’s Quill v. North Dakota case limited states’ power to tax businesses based on whether they have physical presence within the state’s borders.

But the governor and Assembly are hungry for money, not good policy.

Essentially, they want to make money off businesses that aren’t even here, and even the Supreme Court and U.S. Constitution can’t deter them.

Cuomo’s action seems intentionally and cynically drafted to smash through the nation’s founding document. If passed, this proposal would draw New York into an expensive and bitter cycle of litigation, duplicating similar cases already in the courts that challenge rules adopted in other states.

Worse, if it succeeded in court, New York’s bizarre internet cash grab could go viral. Other states would likely follow and empower their tax collectors to reach across New York’s borders.

New Yorkers who sell online could be subject to audit from states where they have never stepped foot. This would further hammer local businesses who take advantage of convenient sales platforms like Amazon or Etsy. They could have to face down California’s or New Jersey’s tax regimes, making New York’s already 49th-ranked business climate even harder to survive.

Like many destructive tax policies, the internet sales tax expansion would so punish sellers and shoppers, that small sellers will avoid using these platforms, and new platforms may avoid locating in New York. That would mean less revenue. Other states that have aggressively targeted e-commerce for stricter tax treatment have received just a fraction of what they hoped.

If the governor and Assembly are serious about making New York more affordable, they should stop scheming about new ways to grab more money out of the pockets of struggling New Yorkers.


Image by a katz