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Calling B.S. On Amazon's Taxation Arguments

Posted by kdawson on from the didn't-do-it-nobody-saw-me dept.

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."

12 of 762 comments (clear)

  1. Use Tax by FredFredrickson · · Score: 5, Insightful

    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
    1. Re:Use Tax by shawn.fox · · Score: 5, Informative

      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.

    2. Re:Use Tax by clarkkent09 · · Score: 5, Insightful

      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

      --
      Negative moral value of force outweighs the positive value of good intentions.
    3. Re:Use Tax by A+nonymous+Coward · · Score: 5, Informative

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

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      Infuriate left and right
  2. Taxes are good... by mi · · Score: 5, Funny

    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.
  3. Internet Tax Freedom Act & Why Only Amazon? by eldavojohn · · Score: 5, Interesting

    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.

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    My work here is dung.
  4. Legally due by j00r0m4nc3r · · Score: 5, Insightful

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

  5. alternative by kimvette · · Score: 5, Insightful

    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
  6. The simple solution.... by Anita+Coney · · Score: 5, Interesting

    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.

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    If someone says he and his monkey have nothing to hide, they almost certainly do.
  7. Re:Consumer's fault, not Amazon's by bflong · · Score: 5, Interesting

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

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    Why is it so hot? Where am I going? What am I doing in this handbasket?
  8. Government on the attack by MSTCrow5429 · · Score: 5, Insightful

    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.

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    Slashdot: Playing Favorites Since 1997
  9. Re:Use Tax - 160,000 different rates by jackb_guppy · · Score: 5, Interesting

    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.