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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."
"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.
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.
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.
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.
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.
No, I'm willing to eliminate 80% of government to make up the difference.
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!"
...past thhe public (the 90% who bought locally and paid taxes don;t like you assholes who not only fail to, but send your money out of state instead of buying locally and supporting the economy)...
You have local companies left in your town? My town has been overrun by giant mega corporations (Costco, Walmart, BestBuy, Target, Borders, etc.). I would love to be able to go to a local store and purchase from a courteous, helpful, and knowledgeable local employee... but there aren't any. They are all teenagers who don't know anything about what they sell and don't care to help you decide what to buy (unless they get commission, then you definitely need this extra $50 gadget and the $100 warranty). Then I get to the checkout stand and have to wait in line behind twenty other people while the idiot cashiers figure out how to ring things up and spend five minutes per customer trying to talk them into buying the warranty again.
Sales tax is a regressive tax policy. Even adjusting rates for food and medical requirements does not negate the disproportionate effect it has on lower income families. In many cases, the sales tax is levied or increased to subsidize construction of mega stadiums and make wealthy sports team owners more wealthy.
Anyway, I live in a sales tax free state. My state recognizes the burden that sales tax adds to businesses and to the state (collecting it and enforcing it) and has chosen a much simpler, more efficient, and more progressive tax policy (income tax).
"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.
The way the state and feds are increasingly taxing the hell out of the citizens of the US, I don't see any problem with a person like you described above doing everything they can within the system, to save every $$ they can from what they earn.
Sadly, most people do work direct, and the tax money is taken from them before they get their check.
The only real way an individual CAN keep their money, is to incorporate. I've done it myself, I incorporated in the state and elected for an "S" corporation for federal taxes. It is great. When I do work through that vehicle, I can write off a TON of things, including mileage I drive to/from work which can add up (I do this in lieu of what you described with buying a company car and depreciating it, too much trouble and it does raise red flags for audits if not careful). I also can pay myself a 'reasonable' salary out of my total bill rate, that saves me $$$ in SS and medicare taxes. For example, say I bill out $100K. I pay myself a 'reasonable' salary of $40K. That means I only have to pay SS and medicare taxes on that $40K. The rest of the $60K falls through and EOY on my personal taxes, and I only pay regular state and federal taxes on that. Save a decent amount of money.
Hey, as long as you work within the law, I see no reason for taking EVERY advantage you can. With the govt getting more and more greedy, and not ever seeming to try to cut their spending, I am even more in favor for using every tool at hand to keep my own fucking money.
And today...I can only see it being down by incorporating one's self..and contracting.
Of course, I'm guessing soon...the Feds will soon be trying to crack down on this...I know they're aiming at the Health Savings Account you can set up when working for yourself for this new health bill, I can't see why they won't start trying to target all ways people can cut their tax rates eventually.
But that's another soapbox for another thread...
Light travels faster than sound. This is why some people appear bright until you hear them speak.........
You think every state's sales tax is a single flat rate? Good luck with that. Now it is true that it's a less-than-overwhelming amount of data, but if you haven't thought the problem through enough to know that it's not just a table of 50 rates, then you shouldn't be trying to estimate the difficulty.
Seconded..... I used to have a small business selling computer equipment and services only in one state and I had more than 50 different rates to deal with. Taxes even vary based on entities you've never heard of, like regional transit authority. My monthly sales tax filing included filling out a 4 page grid of every entity and its tax allocation, that's just for one state! I spent more time on filing sales taxes than I did on my own accounting. In fact, it is one reason I got out of the business. With the state (and local govt) making 8% on every transaction and me having less than a 10% markup, the state was making more than I was after taxes.... and it was costing me a lot of hours to handle, not to mention the potential liability. Sales tax collection for a business that is not a fixed location storefront really doesn't scale down below a certain volume of business. A small eBay shop doing a few dozen sales a month nationwide would have a hard time justifying its existence if they had to track and pay sales tax for everything they sold. Maybe if there was an online tax clearinghouse for every state that would handle all of the filing, paperwork, etc. if you just plug in the address and sale amount - but barring that you couldn't make it work.