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Calling B.S. On Amazon's Taxation Arguments
theodp writes "Over at the Center on Budget and Policy Priorities, Michael Mazerov carefully picks apart Amazon's arguments against collecting sales taxes, arguing that they simply do not withstand scrutiny. While Amazon officials say collecting sales tax in every state would be excessively burdensome, Mazerov notes the e-tailer already collects sales tax in virtually every state for numerous other companies that sell on its website. Mazerov also finds it disingenuous for Amazon to argue that it should not have to help support public services in states in which it has no physical presence when the company fails to support public services in most of the states in which it does have a physical presence. Finally, Mazerov isn't buying Amazon's argument that its opposition to collecting sales tax is not driven by a desire to gain a price advantage over competitors, which he finds at odds with the company's own actions and SEC filings. By claiming sales-tax immunity, says Mazerov, Amazon has enjoyed an unfair 5%-10% price advantage over local retailers, while also depriving states and localities of hundreds of millions of dollars of legally due revenue each year."
It's already the law in some states to report purchases that you have not paid sales tax on, called a Use Tax. If you purchase something and Amazon does not collect sales tax, you are supposed to report this directly and pay it directly to the government.
I think the real problem is that since nobody does this, they expect Amazon to do the legwork.
Realistically, it is a businesses' job to collect tax for the state it currently resides in. It would be an undue burden for just about any business to get the workings of every other state's tax just to do business, say, like a phone order!
Sure, amazon is big enough, but that still crushes the little guys with a hefty start-up capital requirement, and a full time tax guy to figure this out.
What they need is a disclaimer telling customers that they may need to report the use-tax, and give a hyperlink to more info on that.
Belief? Hope? Preference?The Existential Vortex
"Sales" tax is still being levied in the form of "use tax" that consumers are supposed to pay on their state tax returns. Just because most consumers are committing tax fraud doesn't make Amazon a guilty party here.
If there is an article about virtues of taxes on Slashdot, you can bet, it was posted by kdawson...
Just saying...
In Soviet Washington the swamp drains you.
Calling B.S. On Amazon's Taxation Arguments
Who the hell cares what Amazon claims? If you think it should be taxed, write your representatives and demand they do something about the bill that's been renewed through 2014.
And why are we singling out Amazon? Why not Dell or Newegg or even ThinkGeek? Is it because Amazon is doing too well?
Things just don't add up in Mazerov's posting. He levels charges that sound trivial to prove and prosecute--charges that would result in a lot of back taxes paid to a state. Why doesn't he call one of his colleagues up in any of these states and give them all they need to make a name for themselves? The only reason I can think of is that it's a not a cut and dry clear win for the state. Or there are simply too many companies they'd need to prosecute alongside Amazon -- like Best Buy or Walmart who have a presence in every state and run an e-commerce site.
My work here is dung.
If it was legally due then states would sue and win. It's not legally due. Yet.
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.
When you buy something online or via a catalog, you should pay the taxes from the place it was shipped.
If I go to California to buy something, I have to pay California's taxes and not my own. If I pay someone to go to California to buy something for me, I'd have to pay California's taxes and no my own. But for some bizarre reason, when I pay FedEx to ship it to me, suddenly I do not have to pay California's tax but I have to pay my state's use tax.
So to give an example, if I buy something from Amazon and it ships from California, Amazon should bill me California's tax.
Here's why states hate this idea. Because it would allow the states to compete with each other to bring more shipping business into its state. For example, merely to get a bunch of shipping centers built in Oregon, that state could have no such tax. Amazon would then build their shipping centers there and the other states would get nothing.
There's nothing the government hates more than competing.
If someone says he and his monkey have nothing to hide, they almost certainly do.
To look at this another way, perhaps Amazon's 5-10% price advantage will pressure the states to drop their sales tax for the sake of local businesses. This is completely feasible - Alaska, Delaware, Montana, New Hampshire and Oregon already have no sales tax.
The money that consumers use to purchase goods was already taxed, twice. First the government taxes their income, then the state takes a slice too. Do we really need to tax people's money as it goes into the wallet AND as it goes out?
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.
Then stop attacking the local retailers with taxes.
Slashdot: Playing Favorites Since 1997
Why does everyone on /. always react with outrage when someone or some corporation does their best to avoid taxes? I personally hate taxes, hate the fact that the government basically steals a third of my paycheck every month. I have nothing but sympathy for someone who's doing their best to avoid them.
Where does the outrage come from?
Misguided moralizing about obedience to government?
Irritation that someone else is avoiding taxes when you're not?
Enlighten me, please.
How's that for an argument. I sell a lot of stuff on Ebay (used games, videos, et cetera that I no longer want), and New York State has the gull to tell me I should collect taxes when I sell items to New Yorkers. And then file a tax form with NY and pay the money due. I say:
"No Taxation Without Representation"
I am not a New York citizen and never plan to be. If New York wants to give me and the other ~250 million non-NY Americans representation in their Legislature, then okay tax us. But until that happens, we shall consider ourselves foreigners. We owe neither allegiance nor taxes to any foreign government. The New York Legislature can go get fucked.
"I disapprove of what you say, but I will defend to the death your right to say it." - historian Evelyn Beatrice Hall
There are over 160,000 different sales tax rates in the US. Then there are exceptions like to a maximum item value of $2000 in Memphis or which item is charged which tax.
Also the tax rates are normally aligned with boundaries that postal code, city name or county do not follow, so just checking what mailing address does not help. In Washington State the tax rate follow elementary school boundaries for MTA additional amounts.
There are exception areas that like county land inside of incorporated city boarders. Arkansas has alot of towns like this one block in the center of town has a different rate.
Lastly, there is Texas that bases the tax based on location of the business.
All of this do able - I did it for nationwide service company (kill bugs). Personally, I would place the tax calculation as part of shipping requirement and look to Fedex and UPS to supply the tax rate to use.
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!"
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?
There is no "-1 offended" or "-1 you don't agree with me" mod options for a reason.
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.
"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.........
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).
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai