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NY Times, LA Times Want Amazon To Collect More State Taxes
theodp writes "Recalling that CEO Jeff Bezos originally explored placing Amazon.com on an Indian Reservation near San Francisco to 'have access to talent without all the tax consequences,' the NY Times argues it's time to put an end to the e-tailer's 'entity isolation' tax-avoidance games. The LA Times chimes in, saying Amazon's claims that collecting sales tax constitute an undue burden are 'worth a horselaugh,' noting that Amazon boasts it has no problem keeping track of millions of unique products."
Amazon has to collect taxes in countries where the law makes it mandatory, e.g. in the EU. So it's not so hard.
Amazon UK manages to collect the appropriate VAT, depending on country. Which is why, if you buy from e.g. Denmark, you should order from one of the smaller UK book stores so you get to pay the UK VAT (0% on books) instead of the Danish one (25% on everything).
Finally! A year of moderation! Ready for 2019?
In the Chicago area, we have the highest as well as one of the most complicated sales tax in the nation. I live in the NW Suburbs we pay a state tax, a cook county tax, and a local (city) sales tax. The total in most places in Chicago and surrounding suburbs is 10.5%. There is also a dine-in sales tax of 1-2% depending on city and a "loop" sales tax so you pay around 13% tax to eat out in a restaurant. We have different sales tax rates for General Merchandies (9%) , Qualifying Food and Drugs (yep food taxed at 2.25%), Vehicles (7.25 or Chicago Home Rule Tax of 8.5%). We have a "use tax" which may be charged instead of "sales tax" on certain occasions for General Merchandis (6.25% - note not equal to 9% sales tax) or Qualifying Food and Drugs (1% - again not equal to sales tax). We have different local rates for taxing over 2,000 special items (cigarettes, liquor, and other "sin" sales tax varying rates per community make up many of these) in IL depending on municipality including taxes on bottled water (per bottle) and a proposed additional tax on soda pop.
I could be paying 12-13% sales tax for an item while someone 50 miles west of me in Rockford, IL (same state - 45 min drive on highway @65 MPH) pays only 6.5%.
To be honest, if I drive the 3 miles from one town's shopping center to another here in IL, I never have any idea what the exact rate I'll be paying other than it'll be too much.
Apple seems to handle collection of local taxes quite well. They even know that part of my zip code is PIMA county instead of Tucson city, and thus has a (slightly) different tax rate.
I am starting a business with a friend (actually, she does the hard work, and I provide the business and some financial backing), but we collect sales tax in Arizona, and California for selling our images. Amazingly, Quickbooks handles this fine. I just do not happen to live on an Indian Reservation, like Amazon did in placing their Arizona presence.
Truth be told, I do not pick retailers online due to tax free or not. I pick them by reputation, and past experiences. If Amazon one day started collecting taxes and whatnot for the goods purchased through them, I probably wouldn't blink. And I venture to guess that most of their customers wouldn't either. They need to rethink their business plan.
What this really points out is that the tax code (federal and state) needs a thorough cleansing and simplification. Remove the loopholes, tighten the standards, and make the collection and rates balanced, and much of this behavior should disappear.
I suspect I will see pigs flying before this happens though
Suppose you were an idiot and suppose you were a member of Congress
Which their warehouse has property taxes, the employees pay income tax on, also the fed-ex and ups charges include fuel costs and taxes.
The fuel costs and taxes are insufficient to cover the cost of the damage done by shipping. On average a semi-tractor with a reefer unit will get about 6-7 mpg, which is a third to a quarter (say) of the mileage of an auto, yet it does more than three or four times the damage that the car would do; The relative damaging effect of an axle is considered to be approximately proportional to the fourth power of the load. In other words, a 40 ton truck can easily cause as much damage to a typical road as 60,000 one-ton cars. Yet they pay only a few times as much in fuel taxes (since that is tied to fuel consumption) and only a few times as much in registration fees. There are several orders of magnitude unaccounted for here. Where do you propose the difference should come from? The pockets of those who live in the same tax region?
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
As with catalog sales in the days before the Internet, Amazon.com is not required to collect taxes in any jurisdiction where it doesn't have a business presence. There's no trickery involved. Amazon doesn't collect any taxes it isn't required by law to collect, just like you don't pay taxes in states that you've never set foot in.
Since only the federal government can regulate interstate commerce, the ability of State X to force Amazon.com to collect its taxes when it doesn't have a presence in that state would require federal legislation to that effect. Also, for any such federal law to work it seems to me that tax rules and rates would have to be simplified across all 50 states. There's an effort to do so called the Streamlined Sales Tax Project, but despite its name it strikes me as ridiculously overcomplicated (as in "you need a certified computer program to handle the differences between each state's rules") due to the desire to please all the participating states.
"In prison you just have to shut your eyes and take it. Here you have to shut your eyes and give it."
Funny you mention that. Amazon doesn't pay sales tax, you and I do. Amazon is the tax collector in this case. Also, there is a line on your tax forms where you are supposed to enter in the amount of sales tax you owe but didn't pay. But I bet you always put "0" for that line. You don't pay the tax because it's difficult to keep track of and because you know that you won't get caught.
Assuming I'm correct and that you don't manually tally up the sales tax on all non-local purchases -- if you go on vacation in another state and buy some knickknacks, you are technically supposed to pay your local sales tax on them, even if the other state also charges a sales tax! -- then it would appear that businesses do pay what they owe just like the rest of us. That is, when it's easier and cheaper to pay than it is not to, or when there's a high probability they would get caught cheating.
Of course, I'm being a little glib here, and I admit that. I do recognize that companies... well, perhaps it's not cheating, exactly, but they certainly do engage in some practices which clearly are not in the spirit of the law. They get away with it because they have armies of tax lawyers to defend them against the IRS. That's an advantage that big companies have which you and I don't: the government is still bigger and badder than they are, but not nearly so much as for us individual private citizens. And I think it's the difference: I firmly believe that someone making $40k a year would engage in exactly the same sort of loophole-finding, rule-bending behavior when it comes to taxes if he had the opportunity to do so. So I don't think we can exactly claim the moral high ground here. IBM et al. are just acting the way you or I would if we had their resources available to us.