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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
If it was legally due then states would sue and win. It's not legally due. Yet.
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
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.
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?
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?
If Amazon wants to use state provided infrastructure and national defense, they should pay their share of the financial burden.
Their employees and shareholders already pay their share. 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. The business will just raise prices to compensate for the taxes that are imposed on it. The end result is that individuals wind up paying the taxes but it's politically popular because some jackass politician can say that he's being tough on "big [insert boogieman of the day here]".
The sad thing is that people eat this stuff up hook, line and sinker.
I want peace on earth and goodwill toward man.
We are the United States Government! We don't do that sort of thing.
Then stop attacking the local retailers with taxes.
Slashdot: Playing Favorites Since 1997
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.
I would object to it. What you are suggesting is nothing more than a database that would be populated by thousands of different entities. Why does your clearinghouse need to be run by Uncle Sam? We don't expect Uncle Sam to run the DNS root on the internet. We don't expect him to run the routing tables for the PSTN. Why should he run a database that isn't even going to be populated with information from the Feds?
I want peace on earth and goodwill toward man.
We are the United States Government! We don't do that sort of thing.
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.
I wasn't aware that UPS didn't pay federal, state, and local taxes. The part of the transaction that occurs in the state and utilizes state infrastructure is taxed.
I see you included national defense in there as well. Since there is no national sales tax then Amazon already pays all the taxes that would contribute to national defense through federal corporate and income taxes, just like everyone else.
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
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 :)
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.
If I buy something from a merchant California, you want me to pay sales taxes to California. So, suddenly I'm a taxpayer of California, but what services is the state government providing me? Roads, police, fire department, schools? Seems like it would be difficult to provide those things for people who live far outside the state, but if California is providing me with squat, the social contract rationale for why they are entitled to my money kind of falls apart. Do I at least get to vote in California elections, or is your plan also a call for more taxation without representation?
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.
So Amazon can readily keep track of hundreds of thousands of items and associated prices - but a proportionally smaller number of tax variations would be burdensome?
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
The only problem with your conjecture is that the public want their government-provided goodies which cost money. Money that the government gets through taxation.
BTW, before that "tea party" you mention ever happens, it is much more likely that the U.S. government will not be able to continue to sell its debt, resulting in hyper-inflation of the dollar and a collapse of the U.S. economy and probably of the U.S. government.
If you do not understand how and why hyperinflation will occur, you need to go read a book on economics.
There is no "-1 offended" or "-1 you don't agree with me" mod options for a reason.
Wal-mart employees & shareholders pay taxes; should Wal-Mart be allowed ignore sales tax?
rinse & repeat for Blockbuster, McDonald's, Shell Gas Stations, etc...
If I buy something from a merchant California, you want me to pay sales taxes to California. So, suddenly I'm a taxpayer of California, but what services is the state government providing me? Roads, police, fire department, schools?
The state (CA) is providing the infrastructure for the merchant, its warehouse, and its ability to ship to you. You may not drive on CA's roads directly but you are paying the merchant to pay a shipper (USPS, FEDEX, etc.) to drive on those roads.
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
"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.
Of course once a shipment crosses a national border there are import controls that take effect so you can't avoid it.