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Calling B.S. On Amazon's Taxation Arguments
theodp writes "Over at the Center on Budget and Policy Priorities, Michael Mazerov carefully picks apart Amazon's arguments against collecting sales taxes, arguing that they simply do not withstand scrutiny. While Amazon officials say collecting sales tax in every state would be excessively burdensome, Mazerov notes the e-tailer already collects sales tax in virtually every state for numerous other companies that sell on its website. Mazerov also finds it disingenuous for Amazon to argue that it should not have to help support public services in states in which it has no physical presence when the company fails to support public services in most of the states in which it does have a physical presence. Finally, Mazerov isn't buying Amazon's argument that its opposition to collecting sales tax is not driven by a desire to gain a price advantage over competitors, which he finds at odds with the company's own actions and SEC filings. By claiming sales-tax immunity, says Mazerov, Amazon has enjoyed an unfair 5%-10% price advantage over local retailers, while also depriving states and localities of hundreds of millions of dollars of legally due revenue each year."
It's already the law in some states to report purchases that you have not paid sales tax on, called a Use Tax. If you purchase something and Amazon does not collect sales tax, you are supposed to report this directly and pay it directly to the government.
I think the real problem is that since nobody does this, they expect Amazon to do the legwork.
Realistically, it is a businesses' job to collect tax for the state it currently resides in. It would be an undue burden for just about any business to get the workings of every other state's tax just to do business, say, like a phone order!
Sure, amazon is big enough, but that still crushes the little guys with a hefty start-up capital requirement, and a full time tax guy to figure this out.
What they need is a disclaimer telling customers that they may need to report the use-tax, and give a hyperlink to more info on that.
Belief? Hope? Preference?The Existential Vortex
"Sales" tax is still being levied in the form of "use tax" that consumers are supposed to pay on their state tax returns. Just because most consumers are committing tax fraud doesn't make Amazon a guilty party here.
If there is an article about virtues of taxes on Slashdot, you can bet, it was posted by kdawson...
Just saying...
In Soviet Washington the swamp drains you.
As a resident of Washington (where they're headquartered), I can say that a lot of times I choose other retailers over Amazon because Amazon does charge sales tax for me. I go to Newegg a lot because they don't charge sales tax since they're in CA.
Calling B.S. On Amazon's Taxation Arguments
Who the hell cares what Amazon claims? If you think it should be taxed, write your representatives and demand they do something about the bill that's been renewed through 2014.
And why are we singling out Amazon? Why not Dell or Newegg or even ThinkGeek? Is it because Amazon is doing too well?
Things just don't add up in Mazerov's posting. He levels charges that sound trivial to prove and prosecute--charges that would result in a lot of back taxes paid to a state. Why doesn't he call one of his colleagues up in any of these states and give them all they need to make a name for themselves? The only reason I can think of is that it's a not a cut and dry clear win for the state. Or there are simply too many companies they'd need to prosecute alongside Amazon -- like Best Buy or Walmart who have a presence in every state and run an e-commerce site.
My work here is dung.
If it was legally due then states would sue and win. It's not legally due. Yet.
Actually the "use tax" is levied by the state the SELLER is in, not the buyer. As such, they have no jurisdiction over the buyer.
taxes.
I'd like to propose an alternate solution
I know, most politicians won't go with it, but here it is: How about cutting spending, not only making the additional revenue unnecessary, but enabling the cutting or even elimination of many taxes and "user fees?"
The Christian Right is Neither (Christian nor right). See: Matthew 23, Matthew 25, Ezekiel 16:48-50
Charge an "alternative minimum sales tax" of, say, 8.90%, that gets split between the feds and the local government where the business has its business license. Or change the laws such that sales tax is owed in the jurisdiction where the business is headquartered.
This issue of taxing the buyer and expecting the seller to deal with it is pretty absurd. It works for bricks and mortar, but barely - New York tried to collect taxes from New York residents shopping in new Jersey.
So fix the broken tax code instead of playing whack-a-mole with my wallet.
Paying sales-tax is the buyer's responsibility. The seller is merely charged with helping the State collect. I find it worryingly hypocritical of kdawson — and people like him — to accuse retailers like Amazon of "depriving" States of sales taxes, while defending pirate bays and napsters against charges of piracy, in which the end-users engage.
Maybe, this is because Amazon's stand harms the Government, while the napsters harm private enterprise?
In Soviet Washington the swamp drains you.
When you buy something online or via a catalog, you should pay the taxes from the place it was shipped.
If I go to California to buy something, I have to pay California's taxes and not my own. If I pay someone to go to California to buy something for me, I'd have to pay California's taxes and no my own. But for some bizarre reason, when I pay FedEx to ship it to me, suddenly I do not have to pay California's tax but I have to pay my state's use tax.
So to give an example, if I buy something from Amazon and it ships from California, Amazon should bill me California's tax.
Here's why states hate this idea. Because it would allow the states to compete with each other to bring more shipping business into its state. For example, merely to get a bunch of shipping centers built in Oregon, that state could have no such tax. Amazon would then build their shipping centers there and the other states would get nothing.
There's nothing the government hates more than competing.
If someone says he and his monkey have nothing to hide, they almost certainly do.
To look at this another way, perhaps Amazon's 5-10% price advantage will pressure the states to drop their sales tax for the sake of local businesses. This is completely feasible - Alaska, Delaware, Montana, New Hampshire and Oregon already have no sales tax.
The money that consumers use to purchase goods was already taxed, twice. First the government taxes their income, then the state takes a slice too. Do we really need to tax people's money as it goes into the wallet AND as it goes out?
Blah blah blah let's tax some more. Heaven knows the blood-sucking parasite that is government isn't taking enough.
It would make sense to waive sales tax for businesses registered in state or that employ majority of their total workforce in state. These already result in corporate and individual income taxes collected as well as benefiting state's residents. Out of state businesses without physical presence should certainly be charged full sales tax as they are not charged anything else.
Mazerov also finds it disingenuous for Amazon to argue that it should not have to help support public services in states in which it has no physical presence when the company fails to support public services in most of the states in which it does have a physical presence.
Yep. Corporations relentlessly lobby town, county, and state officials to get tax breaks, "loans", grants, and more...all in the promise of "jobs", which is the staple of how politicians get elected.
At least give a look-see to the website for the book The GReat American Jobs Scam. The author cites case after case where companies get tax benefits, loans, grants, special public utility/infrastructure projects, you name it...and companies stick around until the well runs dry or the find a better deal elsewhere, playing governments off each other endlessly.
Meanwhile, the math behind the "number of jobs" created/saved/etc is pretty dubious, and the author points out that most of them are temporary, contract, or otherwise low-income jobs. What's hilarious is when politicians claim they're helping the tax base- right after giving said company a giant tax break they'll never repay, because the company will jet as soon as the break is over!
Please help metamoderate.
Amazon isn't contributing anything to the local economy? Huh? When they employ people, those people pay plenty of taxes. In some states, they aren't sales taxes, but the employees still pay income and property tax. Plus, why should Amazon collect taxes in the state where the purchaser lives? If anything, the delivery of that object depends much more on the infrastructure of the state holding the warehouse and the states in between. Trust me. California is making plenty of money from the salaries that UPS pays the delivery team. They just want to add an additional 10% on top of everything because they can't stop taxing.
Well I place all my orders from overseas (Europe) at Amazon.com (the US site), and the local TAX police hasn't failed to find me not one single time.
we pay fucking VAT on anything we buy, online or otherwise. And that's just extra tax on already high income taxes. Crazy.
Just stop using sales tax. Most states already have income taxes of some kind, it's a simple matter of ratcheting down sales tax until it's eventually zero and ratcheting up income tax.
Sales tax is unfair because it's a regressive tax. It's base on how much you buy, not how much you make, and the poor are taxed more percentage wise than a rich person. A $20 shirt with 6% sales tax costs the same if you make $10,000 vs if you make $1,000,000. Income tax is the fair way to go.
**Commence flames from the other side of the political spectrum**
"All great wisdom is contained in .signature files"
"hundreds of millions of dollars of legally due revenue each year."
Legally due revenue? Isn't this the same argument that the RIAA/MPAA uses?
What exactly is legally due revenue?
After reading the article the only logical conclusion I can reach is that all e-tailers should move their corporate headquarters and distribution outside of the United States. They should then move all of their research and development outside of the United States in case some state government construes that as a presence sufficient to justify taxation. That sounds like a wonderful tax policy there which drives business out of the country. E-tailers are DIFFERENT than typical brick and mortal retailers. The entities they use to distribute their goods and services pay taxes, except for the US Post Office of course. Moreover, there has never been perfect rationality between benefits received and taxes paid.
The first is the nature of how sales tax exists. It is a tax on the customer collected by the merchant. That's an idea that works fine with brick-and-morter: but it is very odd to do mail-order.
Also, despite the fact that sales tax is on the customer, and therefore in the customer's state: many states want to charge sales tax when the merchant is in their state as well, potentially double-taxing a sale.
But a bigger problem exists with non-state sales tax. If Pinellas county, or worse Kenneth City, FL pass a 1% sales tax: they don't exactly rush out to tell Amazon. It's simple enough for brick-and-morter to keep track of the taxes where they are, but to keep track of every state, county, and municipality in the US would indeed be burdensome.
We need to go back and redesign, among other things, the entire concept of sales tax to work in the modern economy.
...but what is bad is an uneven playing field. Why should Amazon have a financial advantage over the store down the street from me?
Actually for me they don't, since I do pay my Use Tax obligations. If anything, buying form amazon is then less convenient because it means one more thing I need to account for while doing my taxes later. However, I know realistically that most of my fellow citizens don't do this, and just treat their internet purchases as "tax-free". That just means higher tax rates overall, penalizing us honest folks.
I do have sympathy for the "it's too burdensome" argument -- not as it applies to Amazon (they're huge, they can handle it) but certainly for the multitude of smaller internet retailers. What is really needed is a federal clearinghouse for this: have each state (and municipality, etc) register their tax requirements with a central authority, have it publish a computer-readable database mapping address->tax rate, and have it collect the money, remitting to states. This is a clear interstate commerce issue, I don't see how even a libertarian could object to a federal role here.
Then stop attacking the local retailers with taxes.
Slashdot: Playing Favorites Since 1997
Politicians, at all levels of government have been nothing but recklessly irresponsible with all the Other Peoples' Money they keep taking, then rgwt go ahead and cite their deficits as an excuse to take more.
Bureaucrats are just looking for more easy marks to work.
Eventually it will be taxed. That's inevitable. But what they should work on instead is keeping internet taxes simple. If they work with lawmakers up-front on a decent tax system for the 'net, then they can influence the structure so that it's not convoluted. But if instead it's incrementally introduced by gradual political pressure, it will then be a mish-mash of rules from different lawmakers and regions, harming internet sells in general via complexity and confusion. Amazon would then have to face both sales taxes and a complexity "tax".
Table-ized A.I.
Just saying...
What are you saying?
Taxes are bad? Okay, let's eliminate taxes altogether. No more public safety. No more road maintenance. No more bridge maintenance. Oh, and let's not forget the sewage Those utility bills used to be so much cheaper and more reliable when there was a utility commission.
Shangri-la!
Don't back pedal on me and declare some taxes 'good' and other 'bad.' You suggest all taxes are bad.
Amazon, and every business like it, endlessly complain that the American business environment is 'hostile' to their growth. Looking back at the last 15 years, I'd say they got everything they wanted plus more. And yet, the business environment is more constrained by legislation designed protect companies the size of Amazon. And yet the crocodile tears keep flowing as companies the size of Amazon ship their work overseas.
Specifically, codifying State-based tax rates is not rocket science. Every decent shopping cart can do it and somehow Amazon can't?
http://www.maxineudall.com/2010/02/should-economists-be-sued-for-malpractice.html
The sales tax is almost 10% where I live. Up yours, Mazerov, and three cheers for Amazon. And here's hoping a meteor hits Sacramento.
Why does everyone on /. always react with outrage when someone or some corporation does their best to avoid taxes? I personally hate taxes, hate the fact that the government basically steals a third of my paycheck every month. I have nothing but sympathy for someone who's doing their best to avoid them.
Where does the outrage come from?
Misguided moralizing about obedience to government?
Irritation that someone else is avoiding taxes when you're not?
Enlighten me, please.
How's that for an argument. I sell a lot of stuff on Ebay (used games, videos, et cetera that I no longer want), and New York State has the gull to tell me I should collect taxes when I sell items to New Yorkers. And then file a tax form with NY and pay the money due. I say:
"No Taxation Without Representation"
I am not a New York citizen and never plan to be. If New York wants to give me and the other ~250 million non-NY Americans representation in their Legislature, then okay tax us. But until that happens, we shall consider ourselves foreigners. We owe neither allegiance nor taxes to any foreign government. The New York Legislature can go get fucked.
"I disapprove of what you say, but I will defend to the death your right to say it." - historian Evelyn Beatrice Hall
There are over 160,000 different sales tax rates in the US. Then there are exceptions like to a maximum item value of $2000 in Memphis or which item is charged which tax.
Also the tax rates are normally aligned with boundaries that postal code, city name or county do not follow, so just checking what mailing address does not help. In Washington State the tax rate follow elementary school boundaries for MTA additional amounts.
There are exception areas that like county land inside of incorporated city boarders. Arkansas has alot of towns like this one block in the center of town has a different rate.
Lastly, there is Texas that bases the tax based on location of the business.
All of this do able - I did it for nationwide service company (kill bugs). Personally, I would place the tax calculation as part of shipping requirement and look to Fedex and UPS to supply the tax rate to use.
Every time I check Amazon the total price is more expensive than if I drove to the local vendor, purchased and paid the sales tax. Typically, the reason is the ridiculously high shipping charges. Typically, in excess of 10% of the purchase price. Example, $22 oven part.. can be had for between $8 and $15 in shipping and handling costs, making it cost from $30 to $37 versus my local cost of $23.82.
As long as there is a shipping and handling charge, and companies can in force a floor price on their goods, Amazon will never be cheaper.
Charge a single tax rate for all on-line purchases and pay each state based on the amount sold to that state.
That removes the issue of constantly varying tax rates. All Amazon has to do is classify each sell based on the state the item was shipped too.
No, I don't. I love kdawson — and his FUD.
Seriously, taxes are evil. A necessary evil at times, but evil. The fewer the better... We accept them as unavoidable, but only kdawson and his kind are happy to see others pay them.
In Soviet Washington the swamp drains you.
..oh, that's in Delaware, which HAS no sales tax. Nevertheless that is where they do business...
Not when you factor in shipping...
The federal government has the SOLE authority to tax and regulate interstate commerce.
If I were in Amazon's shoes I'd tell each of the states to shove it until the federal government says that interstate commerce is liable for each state's sales taxes - which coincidentally - is exactly what Amazon is doing :)
politicians.
I don't know; I suppose you could argue for changing the rules on when a company has to collect sales tax to include (1) being in-state, or (2) having a business partner for whom you calculate in-state tax. What I don't think you can argue for is singling Amazon out and treating it differently from the general rule. If the rule is that it's presumed too burdensome for an out-of-state business to collect sales tax, then that's that.
Hell, let the states set up online services for state tax calculation and just require any business making a sale to use that service to calculate tax; then it's not an undue burden for anyone and you can do away with unenforcable use taxes entirely.
The argument about benefit from public services seems off to me; at most it would convince me that Amazon should pay in the 17 states where it is present, yet TFA seems to imply that because Amazon's argument is "disingenuous" that somehow supports the idea that they shoudl pay in all 50. A better counter is that the point is moot. If we want to talk about what the state is "giving" the company in exchange for the service of collecting taxes... how about access to the consumer market in that state? That seems like a fair deal; after all, what the company gains by not collecting the tax isn't the ability to legally sell at a lower price; it's the ability to give customers the opportunity to evade the tax. "If you're going to encourage law-breaking in our state, you can't do business here" wouldn't offend me one bit.
But this business about Amazon's motive for arguing the point... what difference does that make? Either the reason they give is a valid reason or it isn't a valid reason; whether it's the reason that motivates Amazon simply doesn't matter.
Seriously, taxes are evil. A necessary evil at times, but evil. The fewer the better...
Oh no. No weasel words. You like taxes. You crazy Socialist. If you are a member of REI, you are a Communist too. Maybe you farm and belong to a coop? Communist!
You like the equalization taxes provide. Consistent roads, consistent building codes, safe water, sanitation services, etc.
As soon as you move out of your parent's basement, maybe you'll recognize how big businesses like Amazon shift their costs onto you with 'taxes are evil' pablum.
http://www.maxineudall.com/2010/02/should-economists-be-sued-for-malpractice.html
No income or sales tax.
I'd rather UPS or FedEx get my money. They at least provide a valuable service.
Thank you. Yours is the best answer I've seen. I recently met a woman from Louisiana her is Houston who had a list of people who bought boats and planes in Louisiana. She was "bounty hunting" use taxes for the State of Texas. My biggest argument against Amazon (or any other company) collecting taxes on out-of-state sales tax is that it increases the cost of doing business without compensating the business for the trouble. Essentially, it is a tax on the business by a government that has no jurisdiction and provides no services to the entity required to comply.
If taxes are too high, that is something that should be resolved by the residents of the individual state. Taxation needs to be revisited. The best thoughts I've seen so far have been provided by the Fair Tax people http://www.fairtaxplan.org/ . It probably makes too much sense. Tax collection does nothing about the out-of-control spending and unneeded "services" that cause high taxes.
"The mind works quicker than you think!"
British taxation of American Colonials was "legal", too... until the Boston Tea Party and what followed it.
Just because something is currently "legal" doesn't make it ethical.
In the past, violent uprisings and wars have been fought over less cumulative (i.e., visible + hidden) taxation than Americans and other developed nations endure now. That should make those who are doing the taxing now rather nervous, I should think. Will there be another Tea Party, and who's on the guest list?
Fucking great. More resources wasted by state tax authorities strong-arming middle class shoppers for a couple hundred bucks in sales taxes while corporations and the wealthy *flaunt* the tax system for their own enrichment. Nothing like the strong taking on the weak, who almost always have no choice but to roll over and pay whatever the authorities claim they are supposed to pay because its another 8x defending yourself.
A "consultant" I know works exclusively for his wife's father's business (essentially an employee), but uses all the tax loopholes available to businesses to avoid taxes. Actually he doesn't actually save any money, he uses the loop holes to buy expensive cars and then take the depreciation. Given his sham consultancy, the state lost more on his Mercedes SUV depreciation deduction than any 10 consumers buying crap off Amazon.
But its a good thing the state goes after the little guy rather than the obvious cheat.
The thing I find really amusing about these use tax claims is my local city has a couple of tax surcharges and about every other tax time the paper runs an article with some finance geek from the city spouting his line on how city residents buying stuff outside of the city and hence not paying the city 0.25% surcharge are supposed to remit the difference!
It cracks me up.
All sales tax, income tax, inheritance tax, gift tax, death tax - all are completely illegal, yet we stand by with our wallets open handing the government money, which then hands it to dead-beats who choose not to work, or corporations which either don't pay taxes, or hand over the costs of said taxes to the consumers.
"...when the company fails to support public services in most of the states in which it does have a physical presence..."
O really? So those physically present businesses aren't paying property taxes and all kinds of taxes related to operating a business?
GTFO. I gotta see proof of them actually evading these taxes before I'm about o believe this junk. I would safely assume that if they have a physically present business, they are paying taxes there in one way or another.
"Many forms of Government have been tried and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time."
XML is a known as a key material required to create SMD: Software of Mass Destruction
My comments here are mostly US-centric because those are the most screwed up taxes which cause the problem.
I write code which deals with sales taxes and they are a real mess. You can purchase monthly data which lists taxes for around 100K locations in the US. Part of the problem is that taxes vary by county, but no one writes down their county as part of their address. There are ways to figure it out using free source code and public domain data, but it takes work. If I can do this as only a small part of my job at my small company, Amazon can too, and apparently they do.
But that's a side show.
The real problem is that the powers that be decided that sales tax has to be based on where the buyer is, not the seller. Thus the seller needs an address detailed enough to determine the county and to calculate the correct tax of those 100K data records. In the days of brick and mortar stores only, this was simple. In fact, it actually looked like they seller's location, not the buyer's, because the buyer came to the store to buy. But mail order stores came along and got a big advantage as long as they had no physical presence in other states. And on the other hand, sales taxes didn't really come into play much at all until the 1930s Great Depression when states started looking for alternate sources of income. I don't know why they didn't charge based on seller's location; probably businesses threatened to leave the state, or other states complained about taxation without representation. I would not be surprised to find the lawyers had a big hand in this mess, bigger than mere politicians.
If, instead, the seller's location determined the tax, then the seller would have one tax rate which would seldom change. Every customer would be charged the same tax rate. No monthly data update, no trickery to determine the county, no contortions for all the strange deals various merchants have negotiated with various governments at various levels.
However, as much as I would love to not have to handle this chore any more, it won't change. I would love it if *somebody* would decree that the current system sucks and that the simplest fix is to switch to seller's location from buyer's location. But there are far too many entrenched interests. Amazon would immediately start negotiations with Washington state and threaten to move out if they didn't get their piggy little way. People would stop searching for web sites with no presence in their state, and thus no sales tax, and those companies would scream bloody murder.
Infuriate left and right
What is Amazon supposed to do about county and local taxes? And there is the issue of taxable status based on the item itself. Sometimes food is taxable. Sometimes not. It depends. Same with clothing. Yes, even books. The various authorities have no one to blame but themselves for all of this inconsistency. When a company has physical presence in a particular locale, there is usually someone who knows what the local regulations are. Even if someone sets up a database of zip codes, the postal boundaries do not necessarily coincide with a jurisdiction. And of course, the taxable status of the item remains as a problem.
And to abolish the state-level sales tax.
Then the sticker price can be the real price - like it is in the civilised world.
I'm sure some states will cry foul because they currently don't have any such tax but times change.
This will make the life of all retailers (and etailers) much much easier.
No more city or county or state sales tax.
Just one federal sales tax.
Yeah, I know, you'll all hate that idea because it means everyone will have to pay sales tax all the time.
But it is the only way to even out the playing field.
There are certain categories of product in the UK that Amazon must charge VAT and then pay that to the Gov; if they can do it here - and elsewhere in Europe - why not in the US?
Todd: I hope it proves as delicious as the farmers that grew them
when I have to pay sales tax in addition to shipping, i will instead go to the local Borders, Barnes & Noble, etc. and get instant gratification instead of the best price. Amazon is only one online reseller I use but all of them will lose out when this sales tax enforcement comes to pass.
The ones who will hurt most with this are the small businesses who currently have a [inter]national presence via the web. Where is their advantage when this happens? Or rather, how can they compete at all with the big dogs once this is enacted? Corporatism at its best.
Taxation is Theft. Pure and simple.
http://mises.org/etexts/taxrob.asp
I'll leave the statists here to justify their servitude.
If you strictly adhere to the Constitution:
The Congress shall have Power To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.
In other words, the power to tax interstate goods belongs to Congress, not the States. The Supreme Court has shown some willingness to support this claim, provided the seller has no physical presence in the destination state (Quill Corporation v North Dakota, for example).
The flat rate is not such a bad idea, but what about tax exempt items? Sometimes (but not always) there are exemptions for food, clothing, books, etc. It varies by jurisdiction (state/county/local). Why should these things be taxable only online? The rates could be harmonized but the exemptions are a deal breaker.
What ever happened to that bit about States not being able to tax interstate commerce? The 'use' tax is simple a loophole for that isn't it?
There was that brouhaha with New York a year ago
"The U.S. Supreme Court's ruling 16 years ago in Quill Corp. v. North Dakota reaffirmed that a corporation must have a "substantial nexus" with a state in order to be subject to its sales and use taxes. When corporations lack physical presence in a state and rely only on common-carrier contacts or the mail to reach its customers, those corporations do not fall under the requisite "substantial nexus." Nor does a corporation's mere licensing of software to customers in another state fall under this requirement. "
So why is this even being debated?
The ability to tax, while necessary, is not a revenue generating act. Taxes reduce revenue generated by the citizens of a political entity. Taxes are a burden and reduce the ability reinvest and gain more revenue. While, citizens using a government to provide basic services, by presenting a non-voluntary tithe, is legitimate, in no way should taxes be considered revenue. It was not earned, it was seized. I understand the need for taxation. I just want government employees to realize they are taking my money against my will, and not earning my money with their good works. I don't pay for the police or fire department to show up at my door when I call, I don't pay for the roads and airports, health inspections, or supporting welfare moms. A percentage of my income is seized so my elected representatives can be good stewards and provide required services.
Michael Mazerov's goal is to provide as much money to the government so it can grow as big as possible in support of CBPP's left leaning political agenda. This article needs to be viewed in the context of CBPP's history of advocating entitlements, higher tax rates, and big government. Mazerov is not interested in how many Internet businesses will suffer or go out of business should his recommendations be implemented. It is well understood that when taxes rise, people go out of their way to avoid paying them. Instead of attacking consumers and businesses, Mazerov's time would be better spent helping state governments figure out how to lower their sales tax rates.
Plus, the postal code does not necessarily match where you live. My mailing address, and its postal code, are for the next town over, which handles my mail. The post office for my town, does NOT handle my mail. Sometimes it gets interesting because that town has a street with the same name as my street.
The Supreme Court ruled in favor of the 'use tax' loophole, as long as enforcement of it followed some guidelines that ensured it wasn't being used to discriminate on the state of origin of the product (use tax can't be higher than regular sales tax, for example, see Associated Industries v. Lohman, 511 US 641).
But to answer your actual question, it's being debated because the States are looking for some public sympathy so they can persuade Congress to address the issue with legislation. To which Congress which has shown no interest whatsoever. So I say (sarcastically) "good luck with that".
You mean the free shipping that most of their items include if they're over $25?
I've been buying from Amazon for years. We even pay the $80/yr for free 2 day shipping. We come out WAY ahead.
Or course, even if we were paying the 8% sales tax, we'd prob still be ahead. Finding anything in our area from a brick and mortar for less than MSRP is a rarity. Hell, for motorcycle and car parts I order from CA, pay the shipping, and STILL save money.
aside from all the obvious arguments about how all the high taxes are the reason the US/its states can fund all its defense operations, create social programs that make everyone dependents, and create an inventive for corporate control over a political process instead of the liberty that we founded this country on...
aside from all that, the money I am saving in addition to the convenience really makes the decision for me and now i don't need to drive a car for shopping. that's green.
-- I was raised on the command line, bitch
The thing is, not all of the tax collectors do accept electronic forms to pay the taxes and not all of them are uniform. I know Warren, PA a few years ago still required forms that you need to send back with USPS. In Rochester, NY you have 3 different tax rates depending on the zip code.
I did once try to collect sales tax on a website I was writing but I gave up on it after finding out how much work it requires on the backend. That was before USPS and other sites provided a dependable service for zip codes etc.
Custom electronics and digital signage for your business: www.evcircuits.com
"there is no reason that they should be subsidized over local retailers."
Yes there is actually, Amazon doesn't use the facilities and services that said taxes go to pay for, which is the primary justification for collecting taxes from business in the first place.
I'm right there with you. Ever since the sales tax has gone above 9%(for us) in this idiotic state, I've switched over to making as many purchases as I can online. That amazon prime fee, has more than paid for itself in the amount I've saved in not having to pay the state tax man.
I really don't care about the legal technicalities. Mazerov is an evil jerk for arguing against Amazon, and the entire tax-structure is just thinly veiled robbery. It is all evil -- sales taxes, property taxes, income taxes, capital gains taxes, etc. It is allegedly justified by the non-sense of the "social contract", a very weak justification which has been thoroughly rebuked by Lysander Spooner and others. What it really is is just an argument of "might makes right". The bums in the government have done nothing to earn my money; if they did something worthwhile, they should ask for voluntary contributions, or sell services to the market, like hard-working people in other fields. All that they do is legislate the use of force, and have brutes enforce their will. Very similar to mafia bosses, except that mafia bosses and common robbers don't pretend that they are righteous.
social sciences can never use experience to verify their statemen
Yes! Amazon operates in the clouds! Why don't people understand this?
Because, at the moment, politicians are stupid and wasteful with my money, and I get to refuse to give them more until they prove they can spend it wisely.
Why is it the same people who espouse more spending rarely if ever expect that spending to be efficient or effectively, intelligently used?
YOU: "More money will solve all these 'save the children problems' I care about"
PEOPLE MORE INTELLIGENT THAN YOU: "Why not improve efficiency first so we aren't wasting even more money than we are now? That will give us more money to spend on important projects, like the ones you think are important"
YOU: "More money will solve all these 'save the children problems' I care about, YOU CONSERVATIVES HATE OTHER HUMANS!!!"
PEOPLE MORE INTELLIGENT THAN YOU: "Yeah, no one really expected an intelligent response from you anyway, thanks for obliging".
To be clear, STOP ASKING FOR MORE MONEY UNTIL YOU FIRST INSIST ON MORE EFFICIENCY OR ACCOUNTABILITY, OR I WILL TREAT YOU LIKE THE THIEF YOU ARE.
"Yes! Amazon operates in the clouds! Why don't people understand this?"
Well, they don't operate LOCALLY, as OP was saying, and where they DO operate locally, they actually do collect taxes.
So, apart from being a sarcastic ponce who was totally wrong, what was your point?
Or did you not know that you were making a silly, meaningless point when you called me a "DUMBASS" thereby proving yourself one in the process?
Actually even if you leave the US and renounce your citizenship, you still owe taxes for 10 years.
I don't think I've ever heard of someone getting extradited for this, though.
Uniform Commercial Code pretty much says that only the Federal Government has the power to tax interstate commerce. Most states get around this by calling it a use tax which I thoroughly disagree with the concept.
Unless Amazon has a physical presence in a state, they don't have to collect sales tax. That's the way it works, and changing it is silly. The reason Amazon has to charge tax for the shops on the marketplace is because those guys *do* have a physical presence in the state in question.
Changing the way this works is silly because it violates the moratorium congress passed on taxing the internet.
Do they even have a reason to collect the taxes? Or is that just what the politico-bot does?
Fact is, Online buyers have to pay shipping too. A tax equal to brick-and-morter's would be burdensome, especially for small online retailers.
Moreover, if there is going be some sort of tax, then why not apply it where the administration and infrastructure is already setup to collect it --the shipping companies.
:T:R:A:N:S:
... But Amazon is wrong. Under the current taxation system, they're trying to use their legal army to find every trick in the book to get an *UNFAIR* advantage over their competitors.
I think they are correct, when they say that they shouldn't have to pay sales taxes to states where they don't have a presence. But they are kind of sneaking around the issue by claiming that their warehouses do not constitute a presence because of the way they are legally formed - as separate subsidiaries.
While you can argue that Amazon is wealthy enough to deal with the expense and burden of sales tax collection and payment, their argument has a side effect of helping smaller online businesses which *DON'T* have the wealth to deal with this problem.
And it is a problem. When New York State decided to require sales tax, my business had to do it. And we have nothing in New York. The reason: we didn't want to risk the legal expense of a lawsuit in case NY came after us. But when we tried to implement the sales tax collection, we found it to be incredibly and onerously *difficult*. NY is one of those states where there's a zillion different rates depending on county, city, etc. And customers that know that sometimes cheat by trying to use a correct address, but wrong zip code to trick the system into charging tax for a different location. So that forced us to implement a third party online address correction system. That OAC system costs us tens of thousands of dollars a year! For Amazon, that's nothing. But for us, that's a killer.
Additionally, sales tax, and all of it's nefarious forms, should be illegal. It's an inverse income tax - for the poor, with a low savings rate, it takes a higher percentage of their income than it does for the rich, which spend a smaller percentage of their income and save more.
It's also frequently used as a trick to tax out of staters who can't vote - hotel, rental car taxes, etc. State Politician: "Hey, we can avoid pissing off the voters by raising the hotel tax instead of the state income tax. Oh, and how about a stupid convention center tax on rental cars?" Traveler: "What do rental cars have to do with a stupid convention center? I'm just in town to go to my Aunt's funeral."
If Amazon doesn't reside in my state then they shouldn't be asking me for tax money. If the government thinks I'd pay Use tax well then they're having a laugh because that's not happening. It's always been this way and I see no reason to change it.
As far as local businesses, they don't charge shipping or make you wait ages to get something for free shipping so they have their own competitive edge too. The problem is most don't want to work for the business. They prefer it when they're your only option and they can fuck you over.
That's the idea--keep the government fat and happy at the expense of American companies.
Amazon is based in Seattle, Washington. Purchases made in Washington should be subject to Washington sales tax. (I live in Washington, so this sucks for me, but whatever) Purchases not made in Washington should NOT be subject to any sales tax. It really pisses me off when companies who are not based in this state charge local sales tax for online purchases. Music off the iTunes store, for example, will charge me sales tax, even though Apple is based in California. That's just wrong. The way I see it, having a physical presence should only matter if you physically go there and physically purchase a physical item. Online purchases usually are subject to shipping charges, adding sales tax that shouldn't apply in the first place just makes online purchases that much more expensive than they should be.
--The universe will not be altered by forum threads, even those which are very wry. --Tycho Brahe (Penny Arcade)
Look, the whole idea that Amazon is cheating the states is bogus. It's the residents of the state who are cheating their own state.
The Supreme Court has already ruled on this. It's the law of the land.
Besides which, Amazon gets no benefit from the taxes. Why you think somehow Amazon is part of the overall plan to pay for roads in Arkansas when they have no presence there is an eternal mystery.
I don't want to get into how glutenous governments are for more revenue, but certainly since taxes never really go down, it's best to find ways around the taxes since the government will simply raise taxes anyway.
I have a solution to fix taxation problems: For every dollar you pay in taxes, you get one vote. That way, people will have a good incentive to pay their taxes. More importantly, the people paying the bills get a bigger say in how the government is run. The only people who don't benefit are the people who don't pay taxes and expect a lot of benefits.
Finally, you are a chump.
Actually, if someone buys a physical product from Amazon, it has to be shipped to them, usually by Fedex or UPS. Fedex and UPS both have physical presences in all states, and use facilities and services (like roads) in those states. However, Fedex and UPS, being located in those states, also pay taxes to those states, and charge their customers more to pay that tax.
So, if you buy something on Amazon.com and pay $10 to ship it by Fedex, you are in fact paying the taxes due by paying Fedex, which then pays the State you're in.
The fact that Fedex pays lower taxes than all the B&M retailers, since they don't need giant shopping centers and parking lots to run their operation, is something called "efficiency"; it doesn't need to be taxed more to make up for its inherently greater efficiency than the model where millions of consumers drive around from store to store, using roads and burning gas and having wrecks, looking for sales.
he should probably just kill himself
Actually he IS being taxed..
He's being taxed by the amount it is costing him to record keep, collect, and forward the tax to the state in question.
Brick and mortar stores are taxed in the same amount, but it's very easy to record-keep, as you program up the cash registers and load the (small) exception table for the items you have to deal with. In some cases, as in prepared food at supermarkets, this adds a requirement that the person making the purchase be asked whether or not they intend to eat at tables set aside at the store, or whether they intend to take their purchase home. The answer to this question changes the tax rate in some places.
For an Internet retailer, where it's still not legally clear whether the transaction is taking place in the state of the purchaser or the seller, this is onerous in the extreme. Unlike a brick and mortar company, the transaction is either at the sellers location or the drop-ship warehouse (where consideration is finally exchanged resulting in a sales contract; this is supposedly one of the "outs" Amazon is "exploiting"), or it's at every sellers location at the time of the purchase. For example, on an airplane at 36,000 feet somewhere over the midwest.
The part which is truly onerous to the retailer is that there are, at least on the last database update I'm aware of, 160,000+ sales tax rates at various locations in the U.S., and it is nearly impossible to correlate the location with the GIS information such that you can pick the right sales tax(es) to collect for a given location.
Mail order purchases (before the Internet was such an avenue of commerce) are the reason there are state "use tax" laws, and it's the responsibility of the purchaser to pay the tax in the locality that the purchase is intended to be used.
Amazon is being given a bum rap here. Because they are a single "one stop shopping" target for the government to use as enforcement proxy via unfunded mandate ("get Amazon and you get all the tax on all the traffic through Amazon, and get them to pay for the collection process"), they have a huge bullseye painted on their back. Although the idea of normalizing sales tax across all venues, as was suggested in the article, is very attractive on the face of it, it's unlikely to ever happen.
-- Terry
The fact that taxes are a necessary evil does not make them cease to be evil. I pay for my sewage like any other bill - water to my house is charged for purification and sewage, while water (on a separate meter) to the sprinkler system is charged for purification only. Per gallon. Trash collection is on the same bill. I pay for bridges and roads with gasoline taxes and vehicle registration fees. I pay property taxes for (in theory) police protection and (unusable) public schools.
You've never lived somewhere that government was incompetent, have you?
And again I'm labeled a troll. Don't you people get it? Once the *precedent* of making Amazon collect taxes outside California (their home), then the law can be expanded to include private users selling items on Ebay.
Of course the precedent exists already, but why would a government go through that trouble? It's much easier to shake down buyers in your own state than to try to haul sellers from other states into court.
Plus, as a matter of public policy, it's easier to say that the people of your own state as supposed to know their local taxes than to say that the people of every state needs to know the taxes of every single county & city in the country. It inefficient, unreasonable, and impractical to expect amateur sellers to comply.
But if they go that route, then so what? Suddenly Ebay will have a very compelling reason to automate the process for sellers or else lose their entire customer base. (Would you or anyone you know use Ebay if they didn't handle it for you?)
If it's for-profit but free, you're not the customer -- you're the product (e.g., the Slashdot Beta's "audience").
"Actually,"
Actually what?
You weren't correcting anyone or even responding to their points, so when you say "actually" as though you're correcting something, you look like an asshole who can't read.
They know the taxes to the sub-zipcode. It was one of the first accomplishments of internet era.
As I have been told many times by my conservative friends, liberals attack the person, conservatives attack the issue.
Partisans always claim that about the other side. The fact is that every side makes personal attacks and then pretends that they're "above" the fray. Just read the hand-held signs at any rally sufficiently large enough or angry enough of people supporting the same issues you do, and you'll find someone out there to embarrass you. Sometimes I miss living in a conservative state because it's so much easier to be impressed with your own political beliefs when you rarely encounter people who think the same way for all the wrong reasons. :-)
People are just people, and any sufficiently large group, no matter what their political stripe, is going to be chock full of nuts who think everyone that's not part of their group are all stupid/evil.
If it's for-profit but free, you're not the customer -- you're the product (e.g., the Slashdot Beta's "audience").
Your argument is invalid because Amazon does use US infrastructure, in the form of roads, and regional shipping centers.
All US States rely on sales taxes for proper governance. These taxes must be levied, or we must re-engineer the tax system so that sales taxes are levied on a national level, and we turn over some equivalent tax to the states to keep them afloat. A bill restructuring the tax code would look cleaner from a corporations' rights standpoint, but it would require a massive power grab on the part of the federal government - outlawing local sales tax to level the playing field on the national level.
The only workable solution is to treat Internet retailers as residing in the city where they are shipping, that or the city they are shipping from.
"Your argument is invalid because Amazon does use US infrastructure, in the form of roads, and regional shipping centers."
They pay taxes in the locations where they have physicalpresence "shipping centers", and they pay UPS and FED EX, who are the ones ACTUALLY USING THE ROADS. You see, UPS ships for Amazon,and THEY pay taxes for roads. OOPS!
So, you're still wrong, and I'm still not.
YOUR argument is invalid because you're not educated enough to know either of these things.
Yes there is actually, Amazon doesn't use the facilities and services that said taxes go to pay for, which is the primary justification for collecting taxes from business in the first place.
This is the point I was replying to. Amazon doesn't use facilities and services in their customer's location, but Fedex and UPS certainly do. And they pay taxes for that, and those taxes are paid by the online shopper when they pay UPS or Fedex to ship stuff to them.
Don't be such an asshole when someone's supporting your point.
Ever wonder why you don't have any friends? Maybe it's because you pick fights and call people names over idiotic little details.
"Ever wonder why you don't have any friends? "
No, because I have plenty, what kind of stupidity is that?
"Maybe it's because you pick fights and call people names over idiotic little details"
It's not hard, stop beginning your posts with "Actually" and you won't sound like a fucking asshole,especially when you're not correcting something.
See, THAT is my objection, you don't seem intelligent enough to get it.
" I know that punishing "big business" is politically popular right now but in the end corporate taxes are nothing more than a hidden tax on individuals."
Giving them a tax break rarely results in a cheaper product or more pay for their employees. They will sell a product for the highest price that consumers will accept, and pay their employees the lowest salary that they will accept.
Trickle down is the least efficient way of giving an individual consumer/worker more money.
I see all kinds of crazy arguments for and against this tax. However, the simple fact remains that according to the Constitution only the federal government has the authority to regulate interstate commerce, which is exactly what Amazon is engaging in. It is a violation of the supreme law of the land for any state to impose any tax (use charge, etc) on any trade that takes place in this manner. It is a pitty that the Federal government will not arrest any and all state legislators voting for any such tax or fee and charge them with treason.
Just because someone has a high income tax rate does not mean that the system is fundamentally unfair. A progressive tax system would allocate the burden of the government on a pro-rata basis in regards to usage and ability to pay. Sales tax is a regressive system, which taxes almost everything. Coindicky, Massachusetts had one of the LOWEST if NOT LOWEST sales tax rate in the country. Most of the other states had local taxes and county taxes. Some people might pay 10% on bread and milk. In massachusetts you do not pay sales tax on food unlike every other state. In most states you are paying a high tax of 10% on food. I don't know about you, but I spend approximately 25% of my income on food. I worry about having kids to feed in the future. One of these individuals in a high tax jurisdiction with a salary of 50,00 would suffer the equivalent of 2.5% income tax just for buying food. I am sorry. They are suffering right now. They have to buy clothes, too! Sales tax favors the rich. It pays to be rich in places such as Florida, where you have no income tax. You pay less. You have no burden paying sales tax on your purchases as you do not buy more food then the next individual. A fair tax or VAT would only see this rise to new heights in inequity. Sales tax is also impossible to collect in entirety. It requires significant more personnel to police than an income tax system based on wage garnishment. Any nationalized system to collect tax on a transactional basis would require an organization considerably larger than the current IRS. It would require offices in many more locales in order to reach out to the public. The IRS currently has 100k employees. Each state government has at least 1,000 employees involved in collecting taxes, right now. I would think that a fair tax or vat would require at least 50k more employees on the federal level, but you also need more management to handle the new personnel and facilities. I also think that you need more employees to provide the coverage. Some states have very sparse employee counts.
But what I wanna know is why the iTunes Store is now taxing us?!? I just got charged $.49 when I purchased 1Password Pro app. Where does that money go?
I think therefore I can't be ~TTNH
Wrong. Local Retailers have suffered an unfair 5-10% theft of their profits compared to amazon. If someone robs you, do you complain that your friends and neighbors weren't robbed to the same extent? You can wax poetic all you want about everyone paying "their fair share", but when party A takes money earned by party B, and uses it for purposes not approved of or supported by party B, it's called theft.
Sure it's doable, if you're a megacorporation. So if you want to have only big soulless companies that exploit their workers, impose all the complicated regulations you can think of. Or if you want to have right-sized companies, then what you want is a free market.
(stick that in your ear, leftists!)
Don't piss off The Angry Economist
"Sales tax is unfair because it's a regressive tax."
No it isn't. I paid more tax (by %) in Ohio that had an income and sales tax than I did in Washington which has a sales tax.
Why?
Food, medicines and many services were exempt from sales tax. But ALL of my income was subject to city taxes of 2% (some payed more due to schools). And almost all of my income was subject to State income tax.
Poor people don't buy lots of stuff. And the stuff they buy tends to be cheap. If you exempt food, medications and services the sales tax can be less regressive than an income tax. I'll certainly take a sales tax over a combined sales/income tax any day.
Simple, just abolish the sales tax. It's kind of stupid anyway. Income should be taxed, instead. If someone has more income, he'll buy more stuff so tax his income and sales tax is useless. If a company sells a lot, it has more income. Tax the income instead of the sales. The net result is the same with a lot less red tape.
Sales tax is an invitation to fraud. In my country it's usual for contractors to offer two prices, one with a receipt including sales tax and another without receipt, without sales tax. This is illegal, of course, but it's common practice. Abolish sales tax and it's over.
This has been a gray area for a long time now. Since taxes are tied to physical locations, the Internet has always been problematic in that it is (more or less) all encompassing.
I do agree that this looks like more of the "rich taking from the poor" again. Most online purchases are small, as in, in the realm of a few hundred dollars or less. In the future I could see taxes being collected on large purchases, say, for those totaling $1000 or more, but getting tied up in taxing micro-transactions is often more trouble than its worth.
I think the primary reason this hasn't been a bigger issue is because e-commerce in general has been a huge cash cow for lots of businesses.
Actually they don't by the time you add in shipping on most items. By the time I add shipping to most orders unless I've waited to amass quite an order list that can all be shipped in a single box it ends up costing about the same as going to a b&m and paying sales tax. (Or at least it applies to most of the books that I would otherwise order from them. Their electronics & other prices aren't nearly as good as man other e-tailers specializing in those areas for the most part.)
The reality of the matter for me is that Amazon(or other e-tailers) sometimes will have items that I simply cannot get locally.
Because states are looking for every dime they can get -- and see dollars here.
Besides the constitutional reasons that it is like this that will not change --- lets look at what would happen if you allowed local govts to enforce everyone to collect thier taxes. I know my fair city - Philadelphia -- would within a week decide that all items ordered on line were subject to a 15% tax that they wanted collected. They would cry poor and make all the same arguments here - but mostly they like taxing people that cant vote them out of office and would present this as a way to help local busineses. Soon every township that has a guy on the board that feels mail order places are biting into his business would tax this whole concept out of existance -- which is why we have a clause in the consititution that prevents interferance with inter state commerce -- because without it -- we would.
the county, the city, the municipality.... Once everyone wants their piece all of the logistics arguments come back into play and it will be impossible to keep track of who to pay what to.
"Amazon has enjoyed an unfair 5%-10% price advantage over local retailers, while also depriving states and localities of hundreds of millions of dollars of legally due revenue each year."
Awwww, poor little politicians getting less money to spread to favored parties.
States should lower/eliminate sales taxes, so people keep more of their own money instead of it disappearing into a bureaucratic black hole.
99.9% of people are against taxation. I know this because if you made taxes optional, no one would pay them.
Of course the immoral among us are in favor of property confiscation from others by force, that is to say, taxes.
Yeah, but they get stuff for it at least. And don't forget state income tax and gas taxes and piles of other taxes- all of them disappearing down a singularity.
Also, I'm not into the whole schadenfreude thing. The possibly greater misfortune of others does not cheer me.
Amazon wants us to believe that they are incapable of collecting individual state taxes. And they want us to trust our data with them with their cloud computing offerings. If CDW can do it, Amazon can. On another note, I think we Americans are too heavily taxed already. That is why the Revolutionary War started (over taxes - without representation). Now we have much, much higher taxation, but it's OK because our benevolent dicta...leaders are representing us.
The Thing is.