Online book sales: penalizing lower-income readers?

I’ve been planning to write about the way the rise of online book sales negatively affects lower income readers who don’t have computers or credit cards — an issue I raised briefly in yesterday’s short interview with Dave Weich of Powell’s — but today The Literary Saloon does some of the work for me.

The most recent data we found was from 2001 (for example, here), which found only 76 per cent of American adults had any credit cards (though the average American does, indeed, have several). I.e almost a quarter of Americans had no credit cards just four years ago — and it seems safe to assume that at least a fifth of American adults still don’t. That’s a hell of a lot of people. (Guess what income bracket the majority of them are in ….. And recall that a significant number of Americans don’t even have bank accounts — Federal Reserve estimates from 2001 were that 13.2 per cent of American households had no checking accounts and that 9.5 percent had no bank account whatsoever (see, for example, this report) — and that’s households, not individuals!)

Beyond credit cards, there’s the sales tax problem, which I discussed a few years ago at Moby Lives. Here’s an excerpt:

I’m not a fan of the sales tax. It’s a regressive tax that disproportionately affects lower-income people….

[S]ince many lower–income consumers lack the resources to purchase books and other items online, the effective loophole* for Internet purchases benefits the upper and middle classes, and operates to make the sales tax even more regressive than it otherwise would be.

* Contrary to popular belief, as the Moby Lives piece explains, Internet sales are not exempt from tax. Whether a state’s sales tax is imposed depends on where the customer lives and where the seller is located.

If you live in Florida, for instance, and buy a book online from a Florida retailer, he or she is supposed to collect sales tax on that purchase. And theoretically, if you live in Florida and buy a book online from a retailer located elsewhere, you’re supposed to send the sales tax — called a “use tax” in this situation — to the state on your own.


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