In an effort to increase tax revenues, NY has been trying to tax purchases by NY state residents from online merchants outside NY. It’s been a controversial measure and Amazon has sued over it arguing that the law is unconstitutional. Now online computer and gadget seller NewEgg has announced it will no longer collect the NY state tax either.
Tough break for NY which needs the revenues, but it sure seems like they’re reaching to try to levy this kind of tax. If the states all get busy taxing things going on outside their borders it isn’t clear where it will all end. Ironically, NY has a great base of mail order merchants (who hasn’t heard of the many great camera sellers, for example?). Onerous taxing schemes can backfire by incenting sources of tax revenue to move away over it.