Newegg Defies New York Sales Tax Law

JagsLive informs us that the electronics retailer Newegg.com is defying New York lawmakers; it has suddenly stopped collecting sales tax from New York online shoppers. The "Amazon tax," which went into effect June 1, requires online merchants to collect sales tax if they have any affiliates in the state. Amazon is complying but has sued the state on constitutional grounds. Overstock.com dropped all of its New York affiliates and then joined the Amazon lawsuit. Newegg started out complying with the law on June 1, but stopped collecting taxes for New York on August 21. From Newegg's letter to its customers: "After careful review and consideration, we are pleased to inform you that we have stopped collecting New York sales tax, effective August 21, 2008," reads an email the company tossed at customers late last week, including at least one loyal Reg reader. "This decision was driven by your direct and candid feedback and our continued commitment to you as our valued customers."

Comments

"This decision was driven by your feedback."

[Schezar]

"This decision was driven by your direct and candid feedback and our continued commitment to you as our valued customers."

This is obviously just a publicity statement. There is no way in the world a large corporation would assume the massive risk of defying a law like this on the advice of its customers. Something else precipitated this.

Most likely, the law department in the company examined the law, and then the risk management division (or whoever it is: I have no idea how Newegg is managed) decided that the risk was worth taking. PR, seeing an opportunity for, well, PR, made up a fluff statement about how the dear customers were the reason.

Not that I'm complaining.

And this is good for local businesses exactly how?

[guruevi]

[quote]Overstock.com dropped all of its New York affiliates[/quote]

This measure was supposed to boost local businesses and lower unemployment. Do you think if Amazon and NewEgg drop theirs, the $50m in revenue will be paid out in unemployment?

I am disgusted by the government of my state. I moved from PA to NY for a better job, but literally everything is higher taxed and more expensive. The taxes don't make any sense either. I live near Rochester, NY. Depending on the locality you're in, you can pay 6% (Henrietta) to 10% (Greece) taxes on a variety of things but if you send a letter it's all Rochester, NY. And then there is the paper store, I mean government agencies. Everything needs a permit, paper, registration or a tax. You can't get a single piece of paper without paying at least $10 for it.

It is like every other tax.

[Shivetya]

If consumers, for that matter income earners, had a true understanding of their tax load they would be up in arms. It is one thing to ask for this, that, and the other thing, from your government when you don't know the cost.

So governments do what they do best, they hide the tax. What is the number way to hide the real tax from the taxpayer? Embed it. This means hide it in the cost of goods and services. Lets use an oil company like Exxon for fun, after all its accused of having WINFALL profits. In 2006, Exxon's EBT (earnings before tax) was $67.4 billion, it paid $27.9 billion in taxes (41.4% tax rate), and its NIAT (net income after tax), or profit, was $39.5 billion. So, where does that 27.9 BILLION dollars come from. The taxpayer. Exxon merely wrote the check for all the dollars it collected from you and me to pay it.

The politicians win on every front here, they can hide the true cost of the tax load on the American worker and vilify any corporation that makes big numbers as being against the poor, downtrodden, hungry, or my favorite "children".

Ignorance and envy are the two greatest weapons the politicians employ and from watching the current elections it really pays off

Re:It is like every other tax.

[Aardpig]

But you're missing the point: Exxon will be collecting $67.4 billion from you and me, *irrespective* of whether they are taxed at 40% or 4%. In fact, the tax represents money coming *back* to the people, and not a tax *on* the people. Lower the taxes on Exxon, and there will be less tax revenue with which to fund public profits.

Re:It is like every other tax.

[Shakrai]

FFS. I covered this. Gas is something that most people need. Not want, need. There are few enough oil companies that they can keep prices high and not worry about being out-priced by a competitor, and people will pay for it because they have to.

You have a point if you were looking at the United States in a vacuum. Globally however there are a bit more than a "few" oil companies and pump prices (with the exception of states that subsidize the costs for their citizens) are going up across the World. This isn't a uniquely American problem.

China is putting millions of new vehicles on the road each year. Ditto for India. Meanwhile oil production is falling pretty much everywhere. Is it really that hard of a concept to grasp that oil is a global commodity that is currently facing increased demand at a time when production is leveling off/dropping? This is economics 101 -- you don't have to be Adam Smith to understand it.

If they couldn't just charge what they wanted, the prices wouldn't be even as high as they are now, let alone what they were a couple of months ago

What are you basing this on other than your gut feeling? Congress has investigated the oil companies multiple times for price gouging. They've come up empty every single time. Do you really think that there isn't some ambitious politician that would love to make an issue out of this if he/she could prove they were fixing prices?

Where do you think Exxon gets their oil from? Do you think it's free to obtain? They have a pay the Saudis/Canadians/Mexicans/Venezuelans/Russians/etc market rates to obtain that crude. If they refuse to pay market rates then the producers will just sell it to someone who will -- the Europeans, Chinese or Indians. Even American crude operates under this same basic principle -- why would Exxon sell crude oil under it's direct control below market rates?

The only real solution to this problem is to change the energy paradigm or produce more oil. I prefer the former option given the environmental impact of carbon based fuel but even I'm enough of a realist to know that the switchover isn't going to happen overnight. Do you think the existing transportation infrastructure was built overnight? Tens of thousands of service stations? Hundreds of millions of cars? The mechanics that work on those cars? The dealers that sell them?

What should be done is either some regulation

What do you want to regulate? Honestly.... what would you regulate that would bring prices down? I'm not opposed to all regulation but in this instance I really don't think it's going to help us much. Moreover I'm not convinced that the current price of oil is a bad thing, given that it's finally resulting in people changing their consumption habits.

or trying to get some competition going

Where is that competition going to obtain it's oil from? Do you think there is some surplus of available oil on the market that American oil companies aren't taking advantage of?

And comparing oil companies to telecom doesn't help your argument at all

I wasn't comparing them. Just pointing out the absurdity of targeting the oil industry for it's "excessive" profits.

Re:Use tax = sales tax and you are supposed to pay

[pla]

With a mandated sales tax, it means YOU don't have to keep records for paying end-of-year taxes.

No, it means we can't ignore use taxes as an unconstitutional violation of interstate commerce. Pay if you want, but few do - And suggesting we make it "painless" by having the merchants handle the tax completely misses (and actually hides) the point that we shouldn't pay such taxes in the first place.



End this moronic madness now

And there, we agree (in word if not in spirit) - Let's entirely do away with the single most regressive taxes we have. Personally, I think we should also do away with "withholding" as well, and make everyone actually cough up $10-30k every April 15th - Watch how fast we get serious tax reform when people realize how much they actually pay, rather than merely bitching about it as a mostly-meaningless "rate" they don't really feel thanks to the government slowly boiling the frog.

Any tax revolt is a good one.

[tjstork]

How ironic it is, that, we hear a bunch of liberals bitching about those terrible people on Wall Street, in New York, and it turns out those terrible people on Wall Street took such a beating that the state is looking at a nearly billion dollar tax short fall. Thus, in New York we learn the ultimately failing of progressive taxation, just as we have learned nationally. If the rich do not make any money, the government is screwed.

I'm sick of hearing everyone try and talk about increasing taxes as "providing revenue". It's an insult to compare the activities of government to the activities of the private sector. Government is basically a collection of pie in the sky power mongers that use the power of the gun, cops directed by the legislature, to impose their financial will on people. By contrast, all a private company do is offer a good or a service in return, and thus they are compelled to offer something back.

New York, in particular, is disgusting. They have a tax policy that reflects decades of liberal orthodoxy and the stupidity of the results just staggers the mind. I mean, they raise taxes on cigarettes, and are suddenly horrified to find that people do not buy cigarettes in New York. Now, what do you think the enlightened liberals do up there? Do you think they set the tax at a more reasonable level? No... they call out the cops and pass even -more- laws designed to try and ban people from cigarettes from out of state.

Now, of course, they reach out and are suing, again, with the barrel of the legislative gun, trying to sue someone outside of the state, like a crab or a cancer spreading and grasping desperately for any piece of loot that it can steal.... and they call this revenue.

Re:I'll admit, I'm a bit confused

[wellingj]

Good thing all the mega corporations don't think it's fair either... They will end up fighting it instead of individual citizens.

Re:I'll admit, I'm a bit confused

[neltana]

The commerce clause certainly prevents a state from imposing tariffs on imports from other states. However, the use tax is not a tariff. It is a tax it imposes on its own citizens based on what they will do with the item, not those conducting the commerce.

For instance, in my state, items brought into the state for personal use are generally taxed at the same rate as items bought in state if they are brought into the state within 6 months of purchase. Items brought in for resale are not taxed.

So, clearly, this isn't a tax on commerce. It is a state imposing a tax on its citizens...which is well within the constitution.

Correction To the Email

[ghetto2ivy]

Correction : After careful consideration of how much how much our sales have dropped since the Amazon Tax, we have decided to stop collecting NYS taxes.

Welfare States

[Doc Ruby]

Actually, the "lazies" you're talking about are the "Red States", which all get more money back from the Federal government than they send it in Federal taxes. The "Blue States" like New York pay to prop up those Welfare States by sending more taxes to DC than we get back.

There are a few notable exceptions. New Mexico is the poorest state, with the most tribal population, and lots of large Federal military bases and labs, so its welfare goes mainly to big Federal contractors who don't spread it around the state much. Hawaii is another state with a lot of poor people, many of them tribal, and lots of large Federal military bases. Maine gets a little more than it pays, but again is overall pretty poor. Texas, that "Republican Paradise", is taxed and feeladen every which way, in a giant ripoff, getting just a little less than it pays. Florida is right near the breakeven, but at least it's paying to prop up a system it was #1 in ushering in with its 2000 election. New Hampshire somehow gets screwed, too.

But other than that, the other 44 states all demonstrate that voting Democratic does get you taxed to redistribute your wealth to the rest of the country - even when the redistributors are a Republican controlled Federal government. The list also demonstrates the myth that "the West is independent": other than NM and TX, all those Western states are subsidized by the rest of the country, as they have been since they were colonized.

That list represents the most valuable wealth redistribution programme ever undertaken. Run by Republicans, at the peak of their power. Even as those Republicans cut Federal taxes while running up the Federal expenses, both in record amounts. But evidently spreading the benefits along more or less strict Party lines.

Re:Welfare States

[Anonymous Coward]

Although it was poorly put, he does have a point. Cities naturally operate more efficiently, so while each citizen can afford to pay more taxes, they don't need as much taxes to operate. Some things the federal government pays for, like the highway system, are more keyed to land area than population. Places that are more sparsely populated will most likely get more money than they give.

Likewise, the Red/Blue State probability is linked to population density: people starting families tend to move to places of low population density, and they are highly correlated with voting Republican.

Now, is it a good thing that some states are supporting others? Ideally, every state would be equally efficient, but realistically they are not; no one is going to build a Manhattan in the Rockies. But could the more efficient states still benefit from subsidizing the less efficient ones? Ostensibly yes. For example: Minnesota and Washington both "pull their weight", but none of the states connecting them do. Still, the two benefit from having federally funded rail lines and highways between them, along with police, an educated populace, a number of national parks, etc.

All that said, "bridges to nowhere" greatly annoy me.

Re:Welfare States

[mr_mischief]

Your point is, in case you haven't realized it yet, that taxes based on income -- especially tiered brackets based on income -- are inherently unfair when levied equally against people in areas of entirely divergent costs of living.

When the average income in NY state is much higher than the average income in Montana, but only because the cost of living in NY State is equally higher, then the collection of a higher percentage of a New Yorker's income is inherently unfair.

The minimum deductions and itemized deductions mitigate this somewhat, but not to the point it's equal to a flat percentage tax. The minimum deduction actually favors the one with the lower income, even in areas where the lower income offers a better standard of living.

A flat tax would solve many of these issues. However, it would not solve the simple fact that roads and bridges which serve the entire country, especially the highly populated areas, run through lower populated areas. These roads need to be safe and effective in Missouri and Iowa as much as in California and New York. They are more heavily trafficked per the population in Missouri because of interstate trucking, but the goods mostly pass through to people in other states. The whole country helps pay for those roads because the whole country uses them, even if indirectly.

Federal taxes probably shouldn't pay for direct welfare distributions. The states should be required to do something about it that pleases a very small Federal oversight agency. That way, less money that's not paying for things the whole country uses would be paid for by the whole country.

Re:I'll admit, I'm a bit confused

[Chaos Incarnate]

Heh. A reduction in income taxes? They wouldn't do that. They're too damn greedy. (Which is why they're taxing you twice on income.)

Re:I'll admit, I'm a bit confused

[Shakrai]

Liberals, meet liberalism. It costs money

It seems to me that Conservatism also costs money.....

And before you go and whine that Bush and the GOP aren't real "Conservatives" that's what they are passing themselves off as and they are getting the lions share of the support from people who fashion themselves as Conservatives. Where were the Conservatives when Ron Paul needed the support during the primaries?

Re:I'll admit, I'm a bit confused

[Chaos Incarnate]

Are you taxing the sale, or are you taxing the use?

If you're taxing the sale, then you're interfering with interstate commerce.

If you're taxing the use, then you're discriminating in favor of goods sold in state, because they aren't being taxed for use as well.

Re:How are you rated insightful?

[dcollins]

"I know, there are evil rich people who pay 35% and you pay 28% but its not fair they still have more dollars. What has this country come to if we are so filled with spite and envy that we begrudge anyone doing better than us or set limits on how well any one person is allowed to do?"

I guess you're right. I'd be happy to get back to the good old days of the USA, when "the greatest generation" had a top tax bracket of 70%-94% all the way from 1936 to 1981.

http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#History_of_progressivity_in_federal_income_tax