Every Day's a Tax Holiday At Amazon

theodp writes "With Black Friday here, Slate's Farhad Manjoo reminds readers of how Amazon.com undersells Best Buy, the Apple store, and almost everybody else. Read his lips: no sales taxes. Unless you live in KS, KY, NY, ND, or WA, you'll pay no sales tax on many purchases from Amazon, giving Amazon a huge — and largely hidden — price advantage over most other national retailers. Amazon CEO Jeff Bezos is certainly no fan of taxes — he explored founding Amazon on an Indian reservation, and recently ponied up $100,000 to defeat a proposed WA state income tax, a good investment for someone who's cashed in close to $800,000,000 in Amazon stock this year alone. So, is Amazon's tax-free status unfair? Of course it is, says Manjoo. Amazon has physical operations in 17 states in which the company and its employees enjoy the fruits of local taxes — police and fire protection, roads, hospitals, and other infrastructure that make its operations possible. Yet Amazon skirts tax collection in most of these places through clever legal tricks."

Comments

Re:indirect taxes are important

[Dionysus]

don't all those companies that Amazon competes against elso provides jobs to workers who "in turn pay income taxes and sales taxes (when they purchase goods and services) which pay for the roads and infrastructure"?

Technically true, does it explain pricing?

[ukyoCE]

Neither Best Buy nor Amazon include sales tax in their advertised prices. Yet Amazon's (and Neweggs, and etc.) prices are typically discounted 20% or more compared to the brick and mortar stores. Even after accounting for shipping. I don't think lack of sales tax is why people pick Amazon and Newegg.

I walked into RadioShack on Tuesday

[brokeninside]

I was looking for a Firewire 400 to Firewire 800 cable. The salesman went into the back office to look up a product code, came back, and guided me to a rack with 4 pin to 6 pin Firewire 400 cables.

So I left, went to a a computer, fired up the web browser, pointed it at Amazon, and found the cable I needed in about sixty seconds.

When I'm shopping for books, I tend to have a similar experience. I'm always surprised when local shops have the titles that I want. But what is neat, though, is that with the Amazon Marketplace, nine times out of ten, I'm buying from a small bricks and mortar shop even though I'm purchasing from the 800 pound gorilla of e-merchants. Turns out that Amazon doesn't want to stock hardbound copies of Epictetus' Handbook or Farabi's Epistle on the Intellect. But their associates, small booksellers across the county that specialize in this or that, can do so and partner with Amazon to get national exposure.

Which is to say, Amazon's "unfair" advantage with regard to sales tax is a red herring.

Re:Shipping Costs, Etc.

[Belial6]

Honestly, the whole practice of even calling it "online" sales is a misnomer that confuses the argument. "Online" sales have existed long before "Online" existed. "Online" sales ARE mail-order sales. Arguing about Amazon mail-order is no different then arguing about people buying mail-order in 1900. Just as with everything else, "On a computer" does not make mail-order some completely new thing that is somehow magically different from what has been going on for the last 100 years.

Re:Shipping Costs, Etc.

[noidentity]

So do you believe that merchandise magically appears at a brick&mortar shop ?

Do you believe that shipping 100 widgets on a single truck to a single store costs anywhere close to shipping 100 widgets individually to 100 people's doorsteps?

Re:Bait and switch

[10101001 10101001]

Ahh yes, the shameless grabbing of money by idiotic governments so addicted to spending that even the bonds they issue are worth little more than junk.

Oddly enough, it's not that simple. For the US Federal Government, Treasury Notes are still one of the safest forms of debt to own, even though the US is obviously holding a huge debt. The reason has more to do with the risk of the US defaulting versus their ability to tax and/or grow their way out of debt. Meanwhile, a state like California has suffered from junk bond status on its debt because US states can default on their debt and California has anal laws when it comes to raising taxes yet trivial laws for increasing spending; ironically enough, California like most states has to balance its budget (ie, have no net debt*) every year (or few years, I'm not entirely sure which) so it'd seem to be much safer in the short term.

Shame on you. Instead of reaching your hands out for more money like spoiled children, how about making real efforts to cut spending.

Yea, that'd be the fault of voters. People say "cut spending", elect politicians on a vague platform to deal with the budget (since specifics would leave you unelectable), then turn around and vote out anyone who would actually make the tough choices and cuts spending (since it only takes a few percent of people to swing the vote and people selfishly vote on their own interests). And of course, cutting taxes** is great to get you reelected but it has nothing to do with solving a debt crisis generally.

There's a law of nature - the more you try to tax, the less money you actually get.

Two things. One, the Laffer Curve clearly indicates that in fact there's a range of tax rates that increasing the tax rate will result in greater tax revenue until a point; after that, tax revenue does go down. The evidence would seem to indicate the effective tax rate where tax revenue drops off is close to 50%. Two, I don't think anyone believes government should intrinsically work to maximize tax revenue; it just happens that voters keep electing for spending and that inherently requires more tax revenue to pay off.

People and companies eventually move - out of state, or out of country. It's a simple decision - if the cost of moving is less than the cost of taxes, we move. Careful when you raise the cost of doing business. All the rules, regulations, by laws, and other problems associated with employing people in the US is what is driving business offshore (where things are SIMPLER) to begin with.

Perhaps in part, yes. However, the standard nd cost of living in the US (and hence the inherent minimum wage) is larger than many other countries regardless of taxes, regulation, etc; hence if the product can be shipped and shipping is cheap, then businesses will sanely offshore as much as they can. Meanwhile, sufficient demand for goods eventually raises the standard and cost of living in offshored-work countries (presuming they're capitalistic) and the value of US goods to trade (or more precisely US currency which represents the ability to buy US goods) lowers in value resulting in US goods being more attractive to produce and export.

Of course, we have various regulations for a reason (for example, we don't like China-quality air in our cities) and people and businesses are often unwilling to move given the risks, hardship, and general dislike to leave what they view as home; besides businesses and effectively be in multiple countries at once. Let's not forget that California, even with its repetitive debt crisis, frequently mocked heavy-handed regulation, etc has the 8th largest economy of the world and represents 13% of US GDP and has about ~12.3% of the US population. So, it has slightly more GDP than one would expect for its population size and it has a large percentage of the US population even though it is trivial to move in the