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New York to Implement an 'Amazon Tax'
theodp writes "NY Governor David Paterson is expected to sign a bill requiring online retailers to collect sales taxes on purchases shipped to the state, even if they have no operations or employees working there. The so-called 'Amazon tax', which applies to Internet retailers who derive sales through affiliate programs, would end what for many New Yorkers had been tax-free shopping and generate an estimated $50M in revenue this fiscal year. Experts predict that other states could follow suit with similar provisions."
It's not Constitutional.
http://lkml.org/lkml/2005/8/20/95
I'm not an American, so I don't know how the system works.
My guess is a sales tax is charged (we have GST - Goods and Services Tax - here in New Zealand) on goods sold within the state. Now I presume the purpose of this consumption tax is to pay for goods and services beneficial to the residents of that state.
Hence I guess the argument lies with whether the burden of payment for this tax (and reaping the benefits of such) comes down to those producing said goods and services, or consuming them.
Anyone care to clue us non-Americans in on how this is supposed to work?
The Mothership
This sounds like some kind of serious hogwash to me. The laws applying to Internet sales should be no different than those which apply to catalog sales. If you order something out of a catalog and you have it shipped to the same state where the catalog company is, then you pay the sales tax in that state just as if you had gone to a store in that state and bought the item. But if the catalog company is in Maine and you are in Florida, then you don't pay Jack Schitt for taxes. An internet site that sells stuff is nothing more than an electronic version of a page in a catalog. Amazon is nothing more than a vast catalog of products, as are most other electronic retailing sites. So if you're in the same state where Amazon is, it makes sense that the sales tax should be added to the price, but if you are in any other state, there should be NO tax of any kind on the purchase. Amazing and incredible that every time politicians are faced with a spending problem, they just invent more taxes, instead of reducing all the unnecessary spending. Or as Mark Twain said, "Suppose you're an idiot. And suppose you're a member of Congress. But I repeat myself."
McCain/Palin '08. Now THAT's hope and change!
This is an eventuality, and a needed leveling of the playing field. Why should a multi-billion dollar company get a competitive advantage over local businesses? Hate taxes all you want, but hate them fairly, not just those on your local small businesses. If e-commerce continues to grow, and is not taxed equitably with other businesses, this becomes a tax break for the big internet based merchants, and they need it the least. Consider this another play on the idea of a fair tax - one that levels the playing field for all businesses
Hope is the worst of evils, for it prolongs the torment of man. -- Friedrich Nietzsche
but i know in Ohio, we're supposed to report any out of state purchases that arrive in Ohio (like all the computer stuff i get from newegg) on our 1040s. i say supposed to because i haven't reported any of my purchases any year. god i hope no one from the ohio tax office is reading this...
...shopping in PA malls just over the border, and sent them notices that they had to pay NY sales tax. NY also is trying to force Seneca store owners on sovereign indian land to collect NY sales tax.
This space available.
It doesn't sound too irrational to me. States can already tax you for making purchases out of state and bringing them within state borders. If you buy a car in a state where the sales tax is only 5% and your state's sales tax is 6.5%, the state can charge you a 1.5% import tax. I know that imported liquor is subject to excess taxes in Minnesota if it surpasses a specified volume. I'd be surprised if this didn't apply to other states as well.
I thought that only the fed could levy taxes on interstate commerce.
Rhode Island gets around it by having what they call a Use Tax. Ask me if I've ever paid it. I haven't. I don't think anyone ever has.
Okay New Yorkers, it's time to talk to your governor, your state senators, and your congressmen and let them know what you want, or don't want.
Did you ask to be taxed more? No? Well, your politicians seem to be confused. Please set them straight.
Remember, they are supposed to represent you. It's not as if the government should do whatever it wants to do and you have no say in the situation. It's only that way when you keep quiet.
From Wikipedia:
Arizona has a transaction privilege tax (TPT) that differs from a "true" sales tax in that the tax is levied on the gross receipts of the vendor and is not a liability of the consumer. (As explained in Arizona Administrative Code rule R15-5-2202, vendors are permitted to pass the amount of the tax on to the consumer, but remain the liable parties for the tax to the state.)
And Lenovo does have an office in Phoenix, so...
Then we'll see a bunch of businesses pop up in New Jersey and Connecticut which will forward packages to New York. They're not the buyer or the seller, so they'd have no obligation to tell New York what they shipped to whom and when.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
As it should. I, as an internet merchant, ship my products "FOB here", which means that from the moment the article is delivered to the carrier, it belongs to the buyer. The transaction legally happened here, not in New York. If New York can get away with an import tax, fine... not my problem.
Warning: This signature may offend some viewers.
Your argument holds no water at all. Sales transactions have been conducted remotely via the mails since before the founding of our country.
Why does NY want this new tax if they already have use tax? For two reasons:
Quite frankly, don't be surprised if new taxes like these appear all over the place. The plummeting economy and rapid devaluation of the dollar means that even states have to collect money where they can.
I fully expected this to eventually come about. There's a huge chunk of commerce in the US done through the Internet which drains a lot of possible Tax Revenue from the states when before people would just go to the local electronics store.
I don't believe it's right to tax us this way however, nor do I think it's truly enforceable at this time since tax rates in various states are so complicated and if this actually passes it will be a big precedent for other states and local governments the follow suit, further complicating the situation.
It will be interesting to watch this play out. Sadly, the American people are gonna have to start paying taxes from somewhere. We have a huge debt and a lot of immediate things the government simply needs to take care of.
The insurance companies in Florida got a pretty nice 12-year run of luck after Andrew where they weren't paying out substantial claims but were still collecting inflated premiums,. There was a lot of whining from insurers about "we need increases so we can replenish our reserves", but absolutely nothing mentioned about the billions that were collected between 1992 and 2004 that went straight into shareholders' pockets, the billions collected in the 70's and 80's prior to Andrew, or the billions in profit they've seen since 2004. They're insurance companies, they're paid to assume risk, so pardon me for not feeling their pain when they have to pay out the claims they agreed to. The fact that one of them is getting their knuckles rapped because they're willfully refusing to provide documents subpoenaed by the state isn't helping their relationship with the state either .
I'm looking forward to the unimaginable degree of whining we're going to hear from this industry once the San Andreas Fault has its next big slip.
Please stand clear of the doors, por favor mantenganse alejado de las puertas
Well you are talking about something a heck of lot larger and well outside the scope of the article. It's not offtopic exactly, but "above" topic so to speak.
That being said, I do wholeheartedly agree with you. "If they were doing their job right they'd only need to tax income only tax sales."
If you mean to say there should be only ONE tax in the the whole country and that is all we will ever pay, then AMEN BROTHER, AMEN.
If we obliterated the IRS, and sent a bill to every single state for it's portion of the taxes we would eliminate 90% of the problem on the spot. We would have 50 states competing on the best way to collect taxes from their citizens. Of course the Census would have to speed up considerably, but it could be done. In addition to the IRS being removed, we should remove all taxes that go to the Federal Government period, and create a constitutional amendment banning the direct taxation of any citizen or corporation by the Federal government. The Feds can only create, modify, or delete line items on the Federal Budget which is then ratified by the states EACH year. So no more extortion by the withholding of funds by the Feds.
Since the states would be competing, an obvious byproduct of that would be that if you did not like the way New York was collecting the taxes, you could move to New Mexico, Texas, etc.
I personally believe that the states would be far more pragmatic about collecting the taxes than the Federal government. States would not be interested in active, privacy-destroying methods of collecting taxes as they don't have a need to support the intelligence community with data mining tools. More than likely, the states would just use property taxes, corporate income taxes, and sales taxes and leave the average citizen alone.
States would be far more inclined to go after businesses as well and eliminate any of those loopholes.
> If you read on your taxes, you are supposed to declare your mail-order purchases.
Yup. And if Amazon had the smallest operation in the state of NY they would have to collect and pay NY taxes. But they don't so I'll be blown if I can see how the State of NY will be able to force a CA business to collect a NY tax, do all that bookkeeping and forward the money to NY. If they succeed it will destroy the last fig leaf of Federalism.
Democrat delenda est
Thanks to the housing bubble bursting, states are facing severe budget problems. Expect to see all sorts of ways to tax come out of the woodwork.
if my business is incorporated in Delaware (heh, no sales tax at all, as far as I recall), then how could New York require me to do anything? All they could do is limit my ability to import goods to that state
They couldn't even do that. Congress regulates interstate commerce, not the individual states. Since you have no presence in the state, and they can't apply state laws to you out of the state, there's really nothing they can do but ask politely for you to voluntarily pay these "taxes."
It is precisely because rich people are utilizing loopholes to avoid taxation like purchasing land and such.
No, it is precisely because the government spends way too much money. If our government spent less, there would be less need for taxes.
As a practical matter, it is always going to be difficult as a matter of practicality to tax the rich, or the corporations for their "fair share", as the more you raise taxes, the more profitable using offshore tax havens, etc. become.
Corporations, for example, must be able to deduct business expenses. If you don't, any business with razor-thin profit margins (a good thing, competition) would be bankrupt. A 5% flat tax would be wonderful for my software company with 95%+ margins, but "unfair" (and lethal) to someone making 1-5% doing manufacturing. They would have to raise their rates, making it difficult to compete with imports, requiring more taxation on imported goods to maintain a "level" playing field.
So, it's relatively easy for modern businesses to structure relationships with other companies (not in the US) by licensing technology (for a hefty fee), borrowing money, etc. Payments can go into trust funds, foundations, etc. outside US jurisdiction. To stop these kinds of games, you would need to ban:
- owning, managing, and receiving payments from foreign corporations
- banking by private citizens using banks located outside the United States
- ownership of US corporations by foreign corporations and vice-versa
- prior approval by the US government for all business transactions between US companies and foreign companies, in order to ensure that all contracts are "fair", and not allowing money to be funneled outside the US
- use of foreign-based prepaid debit cards/gift cards, and purchase of us-based cards by foreign nationals and corporations
Even if all this did happen, unscrupulous people would simply conspire with those outside the United States to act fronts. Long story short - the more you attempt to raise taxes on these people, the more profitable it is to be a "tax cheat", and the less revenue you actually bring in.
Besides, I don't know about you, but I'd rather not live in a world like that. On the other hand, reducing spending by the government would go a long way towards fixing budget problems. How about starting with the illegal/unconstitutional ones?
That being said, the simpler and easier the tax code is, the harder it is to dodge taxes. The problem isn't the rich, it's the insane inefficiency and incredible waste of government. A simple straightforward sales tax applied to imports and domestic sales (with a prebate to avoid screwing over the poor) would eliminate most loopholes, practically eliminate the need for the IRS (saving a decent amount of money), and save so much time and effort it's scary.
No "tax day", as your taxes are always paid. No itemization, no deductions, no worrying about whether this is an acceptable business expense.
The terms "import" and "export" clearly refer to imports and exports into the state, regardless of where from. Court precedents are not always Constitutionally correct -- to assume otherwise is naive and logically inconsistent (as they often contradict other court cases). At the time the Constitution was ratified, the states clearly would have considered imports into the state to be imports. The states are each sovereign and independent states -- at the time of the signing of the Constitution this was obvious and commonly understand -- see, for example, the Treaty of Paris 1883. For further proof, see Article I Section 9, clause 4: "No Tax or Duty shall be laid on Articles exported from any State." Thus the word "export" (and hence) "import" do apply to the states (even though this prohibition in particular is on Congress).
Affiliates are not agents though. They are business partners. Affiliation is a voluntary relationship and as such does not allow one party to compel another to do anything through a mandate (only through an agreement). Agents can be compelled to act on a mandate and as such are part of a company. In other words, affiliates are entities with which Amazon does business (just as it would with vendors and end-customers). NY still can't compel Amazon to do anything, BUT and (here's where you might be right) NY can compel NY-based affiliates to collect sales information for the purchases made from them (but not from all of Amazon).
Any guest worker system is indistinguishable from indentured servitude.
I really don't understand this idea in the US of every state doing everything individually in their own little wa
It's really best to think of the US Constitution as a treaty between the states that allows for the creation of a strong federal government but with limited powers. Thus, the commerce clause argument that both left and right wingers always have.
The only reason that the USA wound up with a strong federal government was because the previous "federal" government, the Articles of Confederation, was an abject failure and almost doomed the USA to perpetual inter-state bickering. The US Constitution changed all that, and eventually, the EU will most likely evolved into something like it.
This is my sig.
But the state of NY has no recourse. If they believe that Amazon is in violation of NY State tax code, they would have to raid their facilities to get evidence and then try to sue them (and possibly collect by liquidating their NY assets). But they don't have offices in NY. They don't have assets in NY. The affiliates are separate companies which do not have access to the records of customers that purchased from Amazon itself or other affiliates. My point is not that NY cannot claim to have jurisdiction. They claim it. But the reality simply disagrees.
Any guest worker system is indistinguishable from indentured servitude.