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."

Comments

Use Tax

[FredFredrickson]

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.

Re:Use Tax

[DoofusOfDeath]

I think the real problem is that since nobody does this, they expect Amazon to do the legwork.

I actually do pay use tax, and the fact that no one else does really makes me feel like a chump.

Re:Use Tax

[shawn.fox]

It is unrealistic for every company to figure out what sales tax applies in every state, that is why there is a company that does it for you: Vertex. I recently worked on a project to implement this software for a large retailer. Amazon has far more technical knowledge than the average bricks and mortar retailer, this is no reasonable excuse as to why they cannot pay local sales tax. It is long past time for the online retailers to start paying sales tax just like every other business.

Not having to pay sales tax is one of my primary reasons that I often buy products online. Online retailers already have a lot of advantages for many types of products, there is no reason that they should be subsidized over local retailers.

Re:Use Tax

[FredFredrickson]

Yup. I used to live in NY and we had taxes out the ass! The prudent yard sellers collected sales tax, though most people don't bother.

Re:Use Tax

[Anonymous Coward]

From what I recall, filing my state (Maine) taxes online defaults to paying a small estimated use tax due to purchases on the internet. In your mind, if you uncheck the box, you open yourself up to a much-more-likely audit. Because of that, I think a lot of people just pay the estimated use tax. So I think your analysis of "the only one in the country" is wrong.

Re:Use Tax

[i.r.id10t]

Counties and cities have their own sales taxes, so a state lookup or even a zip code lookup wouldn't cut it. You'd need to know what municipality the buyer is in, then get state, county, and municipality tax rates.

Re:Use Tax

[Chosen Reject]

t would be as much an "undue burden" for me to open a bar

No, when opening a bar, you only need to know the laws relating to your bar in that locale. If you open up a bar in Seattle, you don't need to worry about the laws regarding bars in Ocala, FL.

There are only 50

Yes, there are only 50 states. However, each city might have it's own tax rate. There are a lot more than 50 cities. You would have to have some schmoe look it up for every location, and keep on top of any changes that might happen. Whereas, with your bar example, you only need to keep on top of what the tax rate is for your one location.

Re:Use Tax

[DesertBlade]

50 states, plus county and city taxes. There are probably well over 2,000 different sales tax rates.

Re:Use Tax

[Wyatt Earp]

Only 50? There are hundreds, if not thousands of different sales tax regions in the US.

Re:Use Tax

[travdaddy]

I actually do pay use tax, and the fact that no one else does really makes me feel like a chump.

I'm sure the IRS does a little happy dance every time they see that someone actually paid their use tax! At least you should never ever be audited.

Re:Use Tax

[shawn.fox]

I call BS anyway. There are only 50, is it too much to have some schmoe simply look the damned tax up on a sheet of paper? WTF?

If only it were so simple. The US sales tax system is a byzantine mess. You have state taxes, city taxes, transit authority taxes, public improvement fees, etc which apply based on where the sale occurred. That is the easy piece though. The difficult part is that the tax rates themselves can be different based off the products. Some products are taxable in one state but not in others. A simple example is plain bottled water which is pretty much untaxed everywhere, and flavored bottled water which is taxable in most states. Then you have tax free holidays where a certain class of products are tax free for 3 days (typically back to school), but it is a different set of days for different areas of the country of course.

To top all that off, cities, states, etc are constantly changing the rules as to which products are taxable and which are not. It is a real pain in the a** to deal with, but all of the national retail chains have to deal with it, so why can't Amazon and the other online retail companies? The best case would be to just have a national sales tax that is the same everywhere instead of the current stupid system. Instead of forcing companies to devote millions of person hours to figuring out what taxes to pay, people could actually be doing something productive.

Re:Use Tax

[Rude Turnip]

You're not thinking like the IRS. Their line of thinking would be as follows: "Hurm...they are paying use tax. Must be trying to hide something else."

Re:Use Tax

[d34dluk3]

Why on earth would you pay a tax you don't have to?

Re:Use Tax

[nonregistered]

"simply look the damned tax up on a sheet of paper?"

See, now, it's way more complicated than that. Here in Florida, for example, each COUNTY has it's own rate. And we have to charge according to where the BUYER is because that's where they take ownership of the product. And it changes every year. And IIRC, some of the tax is capped to a limit. You really do need a slew of people to deal with the complexity. If they really want to collect taxes like this, what's needed is a single rate for mail order/Internet purchases to make it all palatable.

Re:Use Tax

[Sandbags]

TRUST ME. We have such a field on our state tax forms. I know 3 different people who were audited in recent years. One of the things the auditors did was rifle through their creidit card purchase history. Any transactions from entities know to not collect sales taxes for the state automatically were flagged, and any amounts the persons had failed to enter on their taxes, they got NAILED for, roughly 7 times the ammount they would have paid in sales tax. It seemed the sate was QUITE INTERESTED in getting that out of the way FIRST, right after validating the base income of the couples.

If Amazon is not collecting taxes for you, MAKE SURE YOU REPORT THE PURCHASES ON YOUR STATE FORMS.

In some cases, credit card and bank draft purchases may be automatically reported to your state as well. Wether you are audited normally or not, failure to report these taxes is still against your state law.

By NOT paying sales taxes online you are hurting your local businesses, which effects the local flow of money, and has rippling and compunding effects on your state's budget. (money that leaves the state is not getting paid to people who live in the state which is failed income tax collection as well, and more failed tax collection when thay would have spent those paychecks...) Of course, if you can buy a product locally, you should do that anyway, but even worse than buying it online, failing to pay the taxes on it takes money out of state budgets, and states employ people too, so that's a loss to your community (which results in higher property and other taxes to make up the shortfall).

2 things are certain, death and taxes. PAY TAXES. Audits are NOT fun, and cost more than being honest and paying.

Re:Use Tax

[Sandbags]

Actually, if you leave that field blank on my state's taxes, your odds of an audit go up by nearly an order of magnitude. More so if you are over 55 and have multiple credit cards. (as they know you likely use mail order, and likely there's money to collect).

Proving these violations is REALLY EASY for a state. They simply need your bank statements and credit card statements, and they look for checks and credit purchaseds from out-of-state companies they already know don;t colelct tax, and then bill you the tax, times three, plus interest and penalties (usually ending up somewhere around 7 times the taxes you should have paid). This process takes about 30-60 minutes for the agent, and you get screwed. I know SEVERAL families who have gone through this recently, having made numerous large purchases online.

The state is not only concerned about purchases made without paying tax, they're also looking for in-state companies you may have paid that to, so they can go after them as well... This is easy money for the state, and an easy argument to get 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). It's a win-win for the politicians, and a huge negative credit mark and a big bill for you.

Most people understand this... you need to learn it. You can choose the easy way or the hard way. (if you;ve been cheating a while, I'll vote for the hard way for you).

Re:Use Tax

[plague3106]

So do you imdemnify customers if they collect the wrong amount of tax? I don't see any pricing on your site, so I'm going to go with "it's fucking expensive." Or, an undue burden.

Re:Use Tax

[LWATCDR]

The real problem is that it wouldn't be so bad if it was just state by state. It really does get down to the county level and sometimes even down to the town.
So suppose I work in one county and live in another. If I order something online does my home county or my work county get the money? Suppose I order it from my cell phone when I am in a different state?
Okay you could just say that I pay the tax where it is delivered? Suppose I guy a game on Steam while I am on trip?
Frankly it is just a HUGE mess.

Re:Use Tax

[commodore64_love]

Ahem.

The IRS has *nothing* to do with Use Taxes. That's your local Member State that collects use tax, not the central government.

Re:Use Tax

[clarkkent09]

Why should a private company be forced to act as an unpaid tax collecting agent of the government? It is the IRS's job to collect taxes, not Amazon's. What people like you obviously don't realize is that most of the bureaucratic, safety related, tax related etc etc requirements that the government imposes on businesses actually benefit large corporations, who sometimes actively lobby for them, because they provide a barrier to entry for the small competitors. You put a finger on it exactly. It's no big deal at all for Amazon to meet these requirements. It IS a big deal for a small company trying to compete with Amazon, and your argument that "if you don't like it don't start a business at all" is music to the ears of large corporations. Some people don't in fact start a business due to already excessive red tape required and we are all worse off for it

Re:Use Tax

[mcgrew]

No, when opening a bar, you only need to know the laws relating to your bar in that locale.

That's the easy part. The hard part is coming up with the money, just like Amazin's problem.

Yes, there are only 50 states. However, each city might have it's own tax rate.

Let them call the city and ask. Two minutes, less time than putting an order in a box. Even better, we have these things called "computers" these days, they don't cost much, and you can keep lots of data in them -- even tax rates for all the cities.

Or just ignore it, and when you get a tax bill, just pay the damned thing.

Re:Use Tax

[kalirion]

You forgot to mention the most important bit of info - what state do you live in?

Re:Use Tax

[blueskies]

Actually, if you leave that field blank on my state's taxes, your odds of an audit go up by nearly an order of magnitude.

To turn this around, the 1000 people or so that fill that blank in can decrease their odds by 10 to help offset their other tax evasion risks?

If you provide other probabilities, we can all max-min the system.

Re:Use Tax

[Anonymous Coward]

...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).

Re:Use Tax

[A nonymous Coward]

Try 100K. We get a monthly update of 100K records.

Re:Use Tax

[Chosen Reject]

According to here there are 500 cities/towns in NJ. California has over 1000 cities. North Dakota only has a few large towns/cities, but over 180 smaller ones. That's a lot of cities.

But wait, there's more. Each county will sometimes have it's own tax rate to add. Here we find that there are over 3,000 counties in the US.

But wait, there's more. Sometimes sales taxes can come from other places. For example "service authorities, and various special districts (such as the Bay Area Rapid Transit district)."

But wait, there's more. Each one of those sales tax codes isn't just a number, it can also include certain items that are exempt, or have different rates.

You're one phone call is now several, and each time they have to tell the tax guy what you are buying so they can determine the rate.

Or just ignore it, and when you get a tax bill, just pay the damned thing.

This is exactly what they are doing. However, no one is sending them a bill, because they don't know what is being purchased by whom, for the which I am glad. They don't need to know. Unless you are advocating that Amazon should be sending each tax district an itemized list of everything you bought.

Keep in mind, that Amazon might be able to afford to keep up with all of this, but there are lots of people who sell online who can't.

Re:Use Tax

[natehoy]

Then determine what you are selling and if it is taxable at that time under that tax jurisdiction's individual rules, which is frequently dependent upon the sales price of the item, the overall total of the order, and what sort of business you are.

Re:Use Tax

[Shagg]

But have you ever physically left your state, bought something, and brought that something back home with you?

This is Slashdot. I thought most of us have never physically left our Mom's basement.

Re:Use Tax

[AndersOSU]

scrolling though these comments, it amazes me how many people on slashdot have a pretty good idea of what a cluster-fuck sales tax is - yet somehow the "fair" tax idea has traction here.

Re:Use Tax

[SunTzuWarmaster]

The best case would be to just have a national sales tax that is the same everywhere instead of the current stupid system.

You are aware that this would completely screw most states AND citizens to the tune of more federal government power, right?

Re:Use Tax

[bitt3n]

I think the real problem is that since nobody does this, they expect Amazon to do the legwork.

I actually do pay use tax, and the fact that no one else does really makes me feel like a chump.

I hope you're paying the chump tax, otherwise you're nothing but a scofflaw.

Re:Use Tax

[Grishnakh]

4. No guilt about tax evasion.

While this doesn't really apply that much to State taxes, you shouldn't feel guilty about not paying taxes, since the money is wasted anyway, and used to support a corrupt system. What has your Federal tax money been spent on recently?
  - bailing out rich bankers who made bad investments in the real estate market. None of that money has helped regular taxpaying Americans.
  - bailing out giant auto companies that couldn't run their businesses properly, including a "cash for clunkers" plan which rewarded people who had bought gas guzzlers, and did nothing for people who spent their money wisely.
  - financing two quagmire wars, propping up corrupt warlords and killing thousands of American soldiers for nothing.
  - pretty soon, it's going to be used to finance a corrupt healthcare "reform" where the monied interests that currently cause healthcare to be ridiculously expensive (inefficient health insurance companies, unethical pharma companies, bad doctors and the resultant malpractice insurance companies and litigation attorneys) get to keep making tons of money, but now guaranteed and socialized by the Federal government.

Paying State taxes doesn't help either, since the Federal government can still survive by taking from the States; it'd be better if we withheld ALL taxes, which would cause the entire system to collapse, and be rebuilt better than before.

Re:Use Tax

[xenocide2]

It's a pragmatic reason: the federal government already requires income tax. You can piggy back on the federal income filings easily, and get their mandatory employer filings and whatnot to combat tax cheats.

In contrast, the sales tax is somewhat hard to prove. In a famous legal case, the Crazy Eddie's electronics franchise got in trouble for slowly stopping their practice of underreporting sales and pocketing the tax they collected from consumers. When you mix that in with categorized sales tax (ie food is free, and booze is extra), and outright sales tax exemptions for charitable organizations and education, every argument you've brought forth applies just as much to sales tax as income tax.

Consumer's fault, not Amazon's

[metaomni]

"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.

Re:Consumer's fault, not Amazon's

[bflong]

I honestly had never heard of Use Tax. A quick Google search reveals that I am a criminal.
Fan-friken-tastic...

Re:Consumer's fault, not Amazon's

[FredFredrickson]

This might help you: http://dor.myflorida.com/dor/consumer/

Taxes are good...

[mi]

If there is an article about virtues of taxes on Slashdot, you can bet, it was posted by kdawson...

Just saying...

Re:Taxes are good...

[Shakrai]

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.

Re:Taxes are good...

[iceperson]

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.

Re:Taxes are good...

[natehoy]

Sales Tax is not a liability of the seller, it is a liability of the purchaser/buyer/user.

True, many states require companies with a physical business presence within their borders to collect the amount and forward it to the state, but the company is not "paying" Sales Tax, they are collecting it. The buyer is ultimately responsible for paying Sales Tax. If the buyer chooses a business that does not collect Sales Tax for their state, they are still responsible for determining and paying the appropriate Sales Tax to their state. This is commonly referred to as "Use Tax" and the fact that it's largely ignored does not make Amazon liable for their customers breaking the tax laws of their home states.

Amazon pays their share of "state-provided infrastructure" through property and municipal business taxes, and "national defense" through federal business taxes. If they have no presence in a state, they don't owe that state squat. Some of their customers might.

Re:Taxes are good...

[natehoy]

Sorry, but Sales Tax is not something Wal-Mary, McDonalds, Shell, etc pay. It's something they collect and forward.

There's a very important distinction here. Please bear with me for a minute.

You, as the buyer of an item, incur Sales Tax on every taxable item you buy. That tax is something you pay, and since you are a user of your state's infrastructure that's all well and good.

Amazon/WallyWorld/MickeyDs/Etc, as the seller of an item, do not incur Sales Tax. If they have a physical presence in your state, they are subject to the laws of your state, and a common law to many states is that they must collect Sales Tax on your behalf and forward it to the State for you. They are, of course, liable for Sales Tax on anything they as a corporation purchase for their own use (office supplies, etc), but they don't "pay" Sales Tax on the stuff you buy from them. You do.

The reason this distinction is important is simple - a company that does not have a presence in your State is not subject to your State's laws, they are subject to Federal law and the laws of their own State. My home state of Maine cannot tell Amazon (a Washington company) how to do business, and that includes making them collect tax for my state. If Amazon put a store in Maine, then they are now subject to Maine law, and would start collecting and forwarding Sales Tax like a good Maine company should.

So, if you as a buyer are purchasing something from a company that is not collecting Sales Tax for you, that doesn't mean the tax isn't still due. It just means the company you are buying from isn't helping you pay it. YOU still owe that tax to YOUR state. Most states refer to this as "Use Tax" and collect it when they collect your income taxes.

Internet Tax Freedom Act & Why Only Amazon?

[eldavojohn]

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.

Re:Internet Tax Freedom Act & Why Only Amazon?

[Otto]

New York came up with a workaround. Since Amazon lets people be "affiliates", they passed a law that says if you have an affiliate in the state, then that constitutes a physical presence, which means Amazon must collect sales taxes on all sales to New Yorkers.

Amazon responded by saying "fine, we won't have any affiliates in New York then" and cut them all off.

New York said "hey, no fair, you didn't cave like everybody else did, time for angry legal action!!".

That's the basic gist of it.

Re:Internet Tax Freedom Act & Why Only Amazon?

[tomhudson]

Amazon responded by saying "fine, we won't have any affiliates in New York then" and cut them all off.

Can we:

1. make that world-wide?
2. make that apply to everyone, not just Amazon?

It would cut down on a lot of wasted bandwidth, etc.

Legally due

[j00r0m4nc3r]

If it was legally due then states would sue and win. It's not legally due. Yet.

Re:Legally due

[bws111]

'Legally due' makes it sound like Amazon is being taxed. That is not what this is about. This is about collecting taxes from the residents of a state when they purchase something, and forwarding that to the state. The residents (of some states anyway) are supposed to pay this even if Amazon doesn't collect it, but many don't.

fuck

[Anonymous Coward]

taxes.

alternative

[kimvette]

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?"

Re:alternative

[mpapet]

How about cutting spending

Okay, where would you begin?

Let's just get rid of Public Health altogether. Never mind it's *far* cheaper to have public health services than not.
How about law enforcement? Second Amendment is all I need.
How about Welfare? Those lazy SOB's need to get to work.
How about Child Services? Kids are young. The sooner they learn to be on their own the better.
How about jails? Stack em' higher!

Finally, the culture of 'starving the beast' *never* works. Why? Because the 'starve the beast' advocates have their own pet publicly-funded projects.

Amazon vs. Pirate Bay

[mi]

while also depriving states and localities of hundreds of millions of dollars of legally due revenue each year

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?

The simple solution....

[Anita Coney]

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.

Re:The simple solution....

[Experiment 626]

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?

Re:The simple solution....

[Synthlight]

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.

Taxes, taxes, taxes

[CopaceticOpus]

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?

Re:Taxes, taxes, taxes

[Shakrai]

Do we really need to tax people's money as it goes into the wallet AND as it goes out?

Yes, how else can we take enough money from the producer class to keep the consumer class voting for the status quo?

Re:Taxes, taxes, taxes

[the eric conspiracy]

Taxes pay for very important things.

Unfortunately they also pay for a buttload of useless waste.

Re:Taxes, taxes, taxes

[CopaceticOpus]

If taxes have to be raised, then raise the income taxes or property taxes. Sales taxes are a pain to collect, and they have a dampening effect on retail businesses. Also, they are skewed against the poor, since poorer people typically must spend a higher percentage of their income on retail goods.

ding ding ding

[SuperBanana]

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!

Taxes? Amazon pays plenty of taxes.

[cornicefire]

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.

Re:Taxes? Amazon pays plenty of taxes.

[Blakey Rat]

Washington's sales tax is only 6.5%, plus whatever each county/city adds to it. If you're paying 10%, or even close to it, you probably live in Seattle and/or King County. (Even Seattle is only 9.2%, I believe. Restaurants are 10%, but you can't really buy a restaurant meal from Amazon.) I live in Snohomish County and my rate is much less.

Unless you're just over-estimating it to keep the Californians from moving up here, in which case: oh wait, it's really 20%, better stay in LA!

States should fix this in their own laws

[hellfire]

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**

Re:States should fix this in their own laws

[d34dluk3]

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.

I see where you're coming from, but if you follow this argument out:

Differentiated income is unfair. The cost of living is based on how much you buy, not how much you make, and the poor pay more percentage wise for basic necessities than a rich person. A $20 shirt costs the same if you make $10,000 vs if you make $1,000,000. Identical income is the fair way to go.

What do we learn from this? Life is unfair. Sorry if you're just finding this out.

Re:States should fix this in their own laws

[secretcurse]

Wait, you're saying it's fair to charge one person more than another when they buy a shirt based on how much money they earn? How is that fair?

Re:States should fix this in their own laws

[DaveV1.0]

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.

So, it is better to punish people for being successful rather than punish people for spending foolishly?
How about the fact that people who make more, spend more?
How about the fact that people who make more pay more in other taxes to the point they pay more taxes over all?
How about the fact that people who are poor spend a greater portion of their income on items that are not taxed?
How about the fact that people who are poor benefit vastly more from the services provided by taxes?

You say income tax is the fair way to go, but income tax rates often increase as one's income increases. Would you support a flat rate tax, say a straight 25% off the top, where everyone who earns any income must pay a certain percentage as tax, without any deductions or credits?

You think it is wrong to be charged the same amount for an item regards of one's income? Tell me, do you work for free or for a reduced rate if your employer's profit goes down? Please explain why a shirt should cost less for someone who makes less money when that is not tied to the cost of production and sale of the shirt? Why should the tax rate be different as only a flat rate tax is fair?

wrong

[hypergreatthing]

"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?

Off-shore

[Aldhibah]

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.

Government on the attack

[MSTCrow5429]

By claiming sales-tax immunity, says Mazerov, Amazon has enjoyed an unfair 5%-10% price advantage over local retailers.

Then stop attacking the local retailers with taxes.

Re:Government on the attack

[gedrin]

But without high taxation to manipulate, how would the government exercise control over local retailers through tax incentives?

Re:Government on the attack

[Uberbah]

You're volunteering to pay higher property and income taxes to make up the difference?

Re:Government on the attack

[plague3106]

No, I'm willing to eliminate 80% of government to make up the difference.

Re:Government on the attack

[Reverberant]

Which 80%?

Mazerov can bite me

[Quiet_Desperation]

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.

Taxes: a good thing?

[d34dluk3]

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.

NO TAXATION, WITHOUT REPRESENTATION

[commodore64_love]

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.

Re:NO TAXATION, WITHOUT REPRESENTATION

[bws111]

You are not being taxed, the purchaser (in the state where he has representation) is. All you are doing is collecting the tax and forwarding it to the state. Yes, you are being asked to do work for the state, but you are not being taxed.

Re:NO TAXATION, WITHOUT REPRESENTATION

[kalirion]

But until that happens, we shall consider ourselves foreigners. We owe neither allegiance nor taxes to any foreign government.

So basically you're a smuggler avoiding tariffs?

Re:NO TAXATION, WITHOUT REPRESENTATION

[badasscat]

Strangely enough, I agree with this. I'm definitely not against taxes in general and sales tax specifically, but it doesn't make sense to me that a retailer should be required to lift a finger to help a state government from which it gets nothing in return. Those taxes are not going back to Amazon; those taxes are going to pay for things like police and schools in the community in which the *buyer* resides. And yes, the buyer is the one actually paying the tax, but it is ridiculous to expect a company outside of the state to pay any of their own money (in time and effort) to do the work of collecting that tax when they have no say over whether and how that tax is collected.

The states' beef is with the buyers, the actual payers of the tax, who then see the benefits from those taxes. They should be the ones required to collect their own taxes, not the retailers who will never see a dime of the money they spend collecting the tax come back.

This is really no different than what the RIAA is doing. It's the same mentality; if you can't get recourse with the people who you actually should be going after, then just go screw somebody else somewhere up the chain instead.

Re:NO TAXATION, WITHOUT REPRESENTATION

[commodore64_love]

First off, why was I labeled "troll"? Second, you are correct that I'm not losing money but I AM losing time trying to fill out New York tax forms (plus accounting for +/- 1/2% variances across different counties). Why should I be subject to this hassle? I am not a citizen of New York. I am not subject to comply with their laws - I'm in Virginia ~300 miles away.

Let New York collect the money from their own citizen (the buyer) not from a foreigner.

Re:NO TAXATION, WITHOUT REPRESENTATION

[mea37]

Why should you be subject to the hassle? Because that's the price the state sets for doing business with them or their citizens. You want to sell to NY people, you help make sure they pay their taxes to NY. Not really that different from a corporation that calls MO home but employs people who are working in CA having to help CA make sure they get their state income taxes from those workers.

Currently the Supreme Court has set some limits around the degree to which that can be required. Since states can't regulate interstate commerce, they can't impose tarifs against other states; so I beileve that's interpreted to mean that their out-of-state sales tax (or use tax) can't exceed their in-state sales tax. And - the provision currently under debate - currently the supreme court doesn't consier it reasonable to expect a business to go through the hassle of knowing 50 states' tax laws; but that has absolutely nothing to do with representation in the state's government.

To your first question - if I were to guess, I'd say you're probably being marked troll by reputation. You've certainly make many specious arguments in the other threads I've seen you in, and so the moderators are probably not inclined to believe you could possibly be serious with this.

Re:NO TAXATION, WITHOUT REPRESENTATION

[mea37]

You can't have it both ways. You're exactly right that they can't collect tarrifs because they're members of the Union, not foreign countreis; and thus your arguments comparing them to foreign powers trying to tax you are inapplicable.

The rules for taxation within the Union are set by the Federal government, not by your sense of fairness. The government says that they can impose taxes on their customers for all goods purchased and used in the state, so long as the tax isn't higher for goods from other states.

Which brings us back to the key point - they aren't taxing you. The debate isn't about whether they can tax you, it's about whether they can compell you to collect a tax for them and send it along in exchange for letting you do business with people who would owe said taxes.

Re:NO TAXATION, WITHOUT REPRESENTATION

[Anonymous Coward]

Strangely enough, I agree with this. I'm definitely not against taxes in general and sales tax specifically, but it doesn't make sense to me that a retailer should be required to lift a finger to help a state government from which it gets nothing in return.

Actually the retailer is getting something in return. It is getting the right to make the sale.

Re:NO TAXATION, WITHOUT REPRESENTATION

[Red Flayer]

Which brings us back to the key point - they aren't taxing you. The debate isn't about whether they can tax you, it's about whether they can compell you to collect a tax for them and send it along in exchange for letting you do business with people who would owe said taxes.

That's a semantics issue. Both parties (buyer & seller) are being taxed -- this is a transactional tax. It really doesn't matter who collects and pays the tax from a theoretical standpoint. From a practical standpoint, it does matter, though -- there's an additional cost to the tax, which is the cost of compliance. Sellers don't feel they need to assume this cost if they don't have a presence in the state in question.

My personal feeling? Online tax-free (effectively) commerce is killing retail commerce and state revenues. As more commerce moves online, we've got to figure out how to get states off using sales tax as a major stream of revenue -- it's like the music publishers whose business model is being destroyed by advancing technology. States can adapt their business model, or they can enact more draconian laws to continue using an outdated model. IMO, sales tax is bad anyway, since it is regressive.

Re:NO TAXATION, WITHOUT REPRESENTATION

[mea37]

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.

A more serious issue is that any state can change its tax laws without any particular schedule or required notice. Realistically the states would have to be responsible for broadcasting this information in a mutually-agreed-upon form.

A system like that probably would work. Note that in my above quote, I didn't say "it isn't reasonable..."; I said "the supreme court doesn't consider it reasonable". With the modern state of technology, I think that's a bogus argument, but it is the current law.

Re:NO TAXATION, WITHOUT REPRESENTATION

[Grishnakh]

Don't be ridiculous. The OP lives in Virginia, which is within the U.S. He's not claiming he doesn't owe Federal taxes, just that he shouldn't be responsible for collecting sales taxes for a State that he doesn't live in. This makes perfect sense to me; he doesn't hold a business license in New York, and has no presence there, so he has no responsibility to collect taxes from citizens there. Attempts by NY to force him to collect their taxes run afoul of the Interstate Commerce clause of the Constitution. Only the Federal government can correctly legally force him to collect out-of-state sales taxes, and they haven't passed any laws doing so.

Moreover, collecting out-of-state sales taxes imposes an undue burden on small businesses. Amazon could easily comply with this due to their size; having a full-time employee just to handle tax compliance would be a drop in the bucket for them. Having a full-time employee to handle tax compliance would be a ridiculous requirement for a 1-person small business.

Re:NO TAXATION, WITHOUT REPRESENTATION

[Cytotoxic]

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.

Re:NO TAXATION, WITHOUT REPRESENTATION

[theaveng]

Of course there is; you can refuse to sell there. But then, why is it any of your business? If the people paying the tax - those being the buyer - think an 8% sales tax is worth what the state provides them , that's none of your business. The fact that you would be called on as an agent to collect said tax does not give you a legitimate voice in deciding how high the tax should be.

You make a valid point but...

The state of New York has no authority to "deputize" some guy in Virginia as their tax collector (or else arrest him). Do they? I cannot think of any legal justification for that. Can you?

Re:NO TAXATION, WITHOUT REPRESENTATION

[theaveng]

You sell a widget for 10 bucks, you get 10 buck from the purchase.
If a state has a 10% tax, you collect 11 bucks, send 1 to the state and end up with 10 bucks.
Now do you see how YOU are not being taxed.

I see a lot of wasted time (which has value) being imposed to do tax paperwork by 49 states that have Zero authority to do that. Where do these 49 governments get the legal authority to impose their laws, and deputize sellers as tax collectors, on non-citizens?

Re:NO TAXATION, WITHOUT REPRESENTATION

[ScentCone]

Actually the retailer is getting something in return. It is getting the right to make the sale

Really? So, you don't have the right to sell me something without paying a tax? We can't meet, and mutually agree on the terms by which we'll exchange value for value ... because we don't have the right to do so?

Something you have to buy from the government is not a right. You buy services from the government. Rights exist in and of themselves.

Only a dyed-in-the-wool Nanny Stater thinks that rights come (in exchange for cash!) from the government. It's a shame that there are enough I-Want-A-Nanny voters out there to elect Nanny legislators, Nanny governors, and Nanny presidents, but there you have it.

Out of curiosity, what did your right to free speech cost you? Or did someone else pay for that, for you? Yeah, I thought so.

Re:NO TAXATION, WITHOUT REPRESENTATION

[theaveng]

Does New York compensate the Virginian for his days of labor wasted "remitting" the tax? If not then it's uncompensated labor enforced upon a non-citizen and illegal. It's just the same as if Canada started demanding Americans collect and remit taxes to Ottawa.

Re:NO TAXATION, WITHOUT REPRESENTATION

[theaveng]

States are not allowed to impose duties on goods crossing their border. Nor are the allowed to block goods from crossing. See the U.S.C.

Re:NO TAXATION, WITHOUT REPRESENTATION

[maharb]

HAHAHA. I am guessing you fall into the category of people who that think higher corporate taxes are the best way to fund government because you are not being taxed. Guess what... EVERY tax falls back on the customer. You think oil companies pay the gas tax? No, the price of gas just goes up and you pay the price of the tax even if it was levied on the company. Taxes are always shared with the customer, of course politicians love to make you think otherwise.. so they can raise taxes and make you happy about it.

Re:Use Tax - 160,000 different rates

[jackb_guppy]

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.

Re:Amazon has enjoyed an unfair 5%-10% price advan

[AlexCorn]

I'd rather UPS or FedEx get my money. They at least provide a valuable service.

Re:Use Tax - Best Answer Yet!

[meburke]

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.

Strong beating up weak to save the rich...again

[swb]

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.

Re:Strong beating up weak to save the rich...again

[Abcd1234]

corporations and the wealthy *flaunt* the tax system

Like... walk it around town and show everyone how incredibly sexy it is? Or mayhap you meant flout? :)

Re:Strong beating up weak to save the rich...again

[geekoid]

You're thinking small and binary*.

It's not a couple of hundred bucks, it's a couple of hundred bucks from a lot of people.

It's not a this or that, they should go after getting there use tax, and they should also work at closing loopholes. These are two separate problems.

BTW, if he is using loopholes, then by definition he is not cheating.

They are supposed to remit the difference. Those people are the cheaters, as in the blatantly don't pay a tax. So if you don't like the person finding legal loopholes, then you should be really pissed at people just plain not paying their taxes.

*I'll forgo the obvious little endian joke.

Re:Strong beating up weak to save the rich...again

[cayenne8]

"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."

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...

Re:Strong beating up weak to save the rich...again

[Red Flayer]

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.

Careful, there. You need to talk to a tax accountant before you get audited. Is $40k reasonable pay for the services you perform on behalf of the corporation? What would someone performing your job get paid in a traditional salaried role?

An acquaintance of mine does tech support in the fashion industry in NY. He got busted by the IRS for doing exactly what you're doing, and had to pay penalties, plus FICA on the difference, and he had to convert the S-Corp into a C-Corp instead (so then he had the joys of paying corporate income tax, paying dividends to himself, paying capital gains on the dividends, and paying income tax & FICA on his salary).

Re:Strong beating up weak to save the rich...again

[cayenne8]

"Careful, there. You need to talk to a tax accountant before you get audited. Is $40k reasonable pay for the services you perform on behalf of the corporation? What would someone performing your job get paid in a traditional salaried role?

An acquaintance of mine does tech support in the fashion industry in NY. He got busted by the IRS for doing exactly what you're doing, and had to pay penalties, plus FICA on the difference, and he had to convert the S-Corp into a C-Corp instead (so then he had the joys of paying corporate income tax, paying dividends to himself, paying capital gains on the dividends, and paying income tax & FICA on his salary)"

Yep...I have a tax accountant..wouldn't do it without it, I also know of this from others doing the same thing for years...in the past you could get away even LESS salary...but, $40K on $100K gross should be fine...and it isn't a whole $80K, since out of that, you deduct all business expenses which reduces down to net income before fall through onto your personal taxes at EOY.

Trust me, I don't wanna be audited, I get good advice, and document everything. I play as close as safe to the legal limits which is not against the law. I even give myself some buffer as needed. The numbers I gave were just for example, not actual numbers for any given year.

Re:Taxes are good... They aren't?

[H0p313ss]

Taxes are evil in the same way that democracy is a terrible political system. (Ref Winston Churchill )

"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."

United Kingdom

[TDyl]

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?

Re:United Kingdom

[vertinox]

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?

There is some explicit stuff in the US constitution that forbids the US Fed from interfering with the state revenue process and cannot tax state revenue.

Also it isn't allowed to raise taxes on behalf of states on interstate commerce... It can however tax corps and citizens directly and give the states money out of its pocket.

As some states do not have sales tax, it may be a problematic thing for the Fed to do.

Shiping versus sales tax

[Nickodeemus]

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.

Re:The problem with "legal" taxation

[DaveV1.0]

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.

legality of states regulating inter-state commerce

[PhantomHarlock]

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?

Re:Amazon has enjoyed an unfair 5%-10% price advan

[BrianRoach]

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.

You're EXACTLY WRONG, there is avery good reason

[ifwm]

"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.

Hear hear!

[bobobobo]

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.

taxes are evil

[dh003i]

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.

The Pesky Part

[kilodelta]

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.

Re:The Pesky Part

[butlerm]

The idea that only the federal government has the power to regulate interstate commerce is derived from the Commerce Clause of the U.S. Constitution, in Article I, Section 8. As interpreted by the Supreme Court in Gibbons v. Ogden (1824).

Actually he IS being taxed

[tlambert]

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

Backwards...

[dark_requiem]

Amazon has enjoyed an unfair 5%-10% price advantage over local retailers

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.

Re:Backwards...

[salesgeek]

Local Retailers have suffered an unfair 5-10% theft of their profits compared to amazon.

Not true at all. Sales tax is paid on top of the price of taxable goods and services. So a local retailer that charges $10 and $.50 in tax is not losing $.50 in profit to anyone. The out of state mail order merchant who sells the same item for $10 with no tax makes no extra profit. The state simply does not collect tax at the time of the transaction (the buyer should pay use tax on his or her state tax return).

Allowing states to collect sales tax on out of state purchases violates the US Constitution's commerce clause, which reserves to the federal government the power to regulate interstate commerce. This is to prevent small issues like collecting and paying sales tax to the aver 41,000 sales tax collecting government units (yes, there are state, county, city, township and in some cases school boards that collect tax) that exist in America. Interstate sales tax effectively turns sales taxation into a tariff system that could be used to give local business an unfair advantage over out of state merchants, and would simply return our economy to the state it was prior to the American revolution.

Fuck the sales tax

[daem0n1x]

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.

Taxes are tied to physical location

[paragon1]

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.

Real reasons we cant tax this

[markov23]

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.

Re:Taxation is Theft

[MrSnivvel]

Taxes paid for the DARPA-funded research you use everyday, grandparent.

The Internet could be different if DARPA didn't do what it did, but neither the concept of networking systems together nor the means of achieving it were by some "divine inspiration" only accessible to those who use coercion to achieve it. Besides, pointing to a "good" done by government doesn't invalidate my point, young pup.

Re:Ordering from overseas...

[riverat1]

Of course once a shipment crosses a national border there are import controls that take effect so you can't avoid it.