- All of the online merchants are now liable to collect and pay sales taxes to more than 1,400 municipalities in the US. The merchants will also have to monitor for the frequent changes that the municipalities make. There is not an off-the-shelf software to enable the merchants to manage this process themselves. The only choice that a merchant will have to become compliant will be to move their online stores to a platform which can manage this for them such as Shopify (symbol:SHOP) which is the largest online merchant hosting company. This will effectively put all of the independent hosting sites and programmers who work for them out of business.
- The tax will also negatively affect brick and mortar retailers who sell a product in a store in one state and then ship it to the customer’s state of residence. This will reduce retail sales of especially luxury goods. Once again, since Wal-Mart does not sell luxury goods it will not be affected.
- Since the tax will reduce the demand to ship it will negatively impact the revenue and profits of the shippers. Federal Express shares have declined by 6.2% versus Wal-Mart shares since the ruling.
The new tax will definitely slow down the digital and the brick and mortar economy. It further supports the probability that the S&P 500 hit its all-time high for the secular bull which was born in 2009 in January of 2018. See my February 6, 2018, Equities.com article “BULL DEAD, BEAR DOB 01/31/18: Expect Stock Market Decline of at Least 50%”. The video below provides details about the secular bulls and bears since the 1800s in the US. Since the minimum life span of a secular bear is 8 years its viewing is highly recommended.