Under current law, Internet retailers have to charge sales tax in states where they have a significant physical presence — like, say, a big warehouse. For a long time, Amazon kept warehouses out of big states so it could avoid charging sales tax in those states.
Brick-and-mortar retailers didn’t like this, and started lobbying state governments to push for Amazon to charge sales tax. So Amazon changed its strategy. The company agreed to start paying sales tax in more states — and it started building huge warehouses near major metropolitan areas in those states.
The warehouses meant the company had to start charging sales tax. But having warehouses closer to big cities also allowed Amazon to start offering same-day delivery to millions of customers.
As the FT reported last year, the brick-and-mortar stores got the level playing field they wanted for sales tax. But they also got a new level of competition from Amazon. If the company can make cheap, same-day delivery work, it will eliminate one of the last advantages of physical stores.
