SAY IT AIN’T SO! Seeking Alpha: The Upcoming Crash Of Apple And Amazon. I don’t think the sales tax “loophole” is that crucial to Amazon, but I could be wrong. In its early days, though, Amazon’s biggest appeal came from the discounts. Now it comes from the service. I think that means that they could raise prices and still do well. Just look at this chart of Kindle book sales vs. physical book sales.

UPDATE: Reader John Miller writes:

Denninger claims Amazon has a 6% sales tax advantage over “everyone else” – which is patently untrue. They have a 6% (plus or minus) sales tax advantage over the local brick-and-mortar store, and over those online vendors who happen to be located in your state.

But would that 6% matter that much?

For me, Amazon’s “competition” is the gas station.

Attempting to shop locally loses a lot of its luster when you’re spending the entire trip to the store thinking in terms of what percentage of a UPS shipment it’s costing you to get there and back.

Broadly speaking, local shopping is now for immediate needs, things that cannot economically be shipped, and things that require hands-on evaluation before purchase.

Yeah, that’s my take too.

ANOTHER UPDATE: Reader Wes Taylor writes: “I live in Washington state, and due to the presence of Amazon’s headquarters in Seattle, I have had, from the time Amazon went online, to pay the state’s 8+% sales tax on everything I buy from Amazon. I still shop Amazon because they have selection I can’t find locally, and often their price is less than 92% of the local store’s price, so even with sales tax, it’s cheaper. I do have to keep my orders over $25 in order to get free shipping.” Or you could get Amazon Prime.

MORE: Reader David Newton writes: “I would very much agree with your correspondents on the question of whether a sales tax advantage is crucial to Amazon. I live in the UK and it does not matter where a business is physically based, if it has sufficient sales in the UK it has to pay VAT. At the moment VAT here is at 20% for most things with some things that are considered “vital” such as books at 0% and a few other things (which Amazon doesn’t tend to sell) at 5%. Even without a sales tax advantage Amazon still consistently has lower prices than high street stores and also has a better selection. In the UK we even get free shipping on anything dispatched by Amazon, although naturally the free shipping is by a slower service. Regardless of how they started their brand reputation is now based on both good price and good selection, with reliable delivery thrown in as well.” Good point.