Amazon Pulling Out of Texas Over $269 Million Tax Bill

ralphart writes with this excerpt from the Dallas Morning News: "As a result of an ongoing tax dispute with Texas, Amazon.com has decided to take its ball and go home. The online retailer said Thursday that it would shutter its Irving distribution facility April 12 and cancel plans to hire as many as 1,000 additional workers rather than pay Texas what the state says is owed in uncollected sales tax. Texas wants $269 million from Seattle-based Amazon in past-due sales tax. It sent the bill to the company last October." We've discussed the online retailer's tax battles with other states in the past.

Comments

Enough of this

[schnikies79]

I can't blame Amazon at all for this.

This whole tax from the state it comes from/tax from the state you live in needs to be decided (federally) and set in stone once and for all. Same goes for who collects it and when.

Re:Enough of this

[sessamoid]

I collect sales tax for those purchases. But even if I didn't, I'd still owe just as much to the state based on the total amount I sold to Texans, pure and simple.

Just because Amazon did the wrong thing doesn't mean Texas is "asking for a handout."

From what I understand, Texas is asking for $250M in taxes from before Amazon had a presence in the state, during which time they were absolved of being required to collect them. In that case, it's just like any other mail order business where the purchaser is required to report those taxes and pay the taxes himself. So, no. It's not the same thing.

Normally

[phantomfive]

Good. Sales tax is a regressive tax, meaning poor people pay more than rich people. Even if you want to stick it to Amazon, in a very real way, sale tax is passed on to the consumer. The sooner we can get rid of that awful tax and move to a more equitable tax system, the better.

(Note: it is true you can soften the blow of a sales tax somewhat by exempting things like food, things that poor people buy; but then it's a hump tax, where the middle ends up paying the highest percentage. That's not equitable either).

Re:Normally

[Anonymous Coward]

Good. Sales tax is a regressive tax, meaning poor people pay more than rich people.

Yeah, cause the poor buy SO much more than the rich...

Re:Normally

[Skarecrow77]

Good. Sales tax is a regressive tax, meaning poor people pay more than rich people. Even if you want to stick it to Amazon, in a very real way, sale tax is passed on to the consumer. The sooner we can get rid of that awful tax and move to a more equitable tax system, the better..

I assume you're speaking as a relative percentage of entire income, because if you mean that in absolute terms, it's a pretty silly statement. I think it's a pretty safe bet that "rich" people purchase a good bit more than "poor" people do, and thus pay significantly more money in sales tax. In the unlikely event that such a statement isn't true, and that rich people aren't buying more than poor people... well maybe that's why the poor people are poor, maybe they should spend less?

I know, I know, rich man keeping the little man down, blah blah top 10% of the population has 80% of the wealth, etc. whatever. all I know is that I've met many "poor" people in my life who when they get that income tax refund or birthday gift of cash etc, go out and buy a couch or a tv instead of paying their credit card bill.

Re:Normally

[Skarecrow77]

So, you would suggest that rich people should pay sales tax in relation to their income? So if the poor person buys a pair of shoes and pays $3 sales tax on them, the same pair of shoes should rack up $300 for the rich person? In what world does that seem fair to you? That's massively penalizing success and encouraging failure. how is anybody supposed to succeed if success is penalized?

The whole idea of making more money is that you get to keep more of it, so your expenses are lower relative to what you earn. it sounds to me that you want to arbitrarily raise expenses based on what you earn, which of course defeats the entire purpose of attempting to better one's place in life. Maybe that's the idea comrade?

Re:Normally

[Nadaka]

Yes actually. the poor spend near 100% of their income on basic goods and necessities and outnumber the wealthy 10 to 1.

A wealthy person only buys so much crap. A hypothetical 10% sales tax takes ~10% of a poor persons income while the same 10% sales tax may take 0.01% of a wealthy persons income.

The only way for sales tax to be close to "flat" is if you charged it on the purchase of financial instruments like stock.

Re:Normally

[cpt kangarooski]

Amen to that. It amazes me how some people think a flat tax is worse for the "poor". Um, if taxes were higher for the rich they would likely buy a little less. Less goods sold = less jobs provided. It's called trickle-down. And that kind of thinking does hurt the poor as they are the class usually employed in production lines.

No, not really. Rich people don't buy very much stuff, in proportion to their income, as it is. There's a limit to how many things a person wants, or needs, or is prepared to deal with. A rich person might have a nice tv or two, but they won't have a thousand of them; a billionaire could afford a different car for every day of the year, but will likely only drive one on a day to day basis. No one really needs more than one cellphone or PC; some people might have more than one, but it really becomes a hassle to deal with. Even if you could afford to buy a thousand iPhones, you'd only ever carry around one, so why bother?

In short, give wealthy people more money, and they probably will not spend it on goods, because they already have all the goods they want. And trickle-down economics have never, ever worked. (Well, except to benefit the wealthy at the expense of everyone else, but that's not a good thing)

Re:Normally

[butalearner]

So, you would suggest that rich people should pay sales tax in relation to their income? So if the poor person buys a pair of shoes and pays $3 sales tax on them, the same pair of shoes should rack up $300 for the rich person?

Hey, way to take it to the logical extreme there! Let's look at this from another angle. Under our current system, the economy has grown by about 20% in the last ten years. And yet, the wages of the lower and middle classes have been virtually unchanged. Guess where all of that wealth is going? Tell me, how is that fair for the middle class, to whom this country owes most of its productivity gains? And you want to make it *worse* by lowering taxes on the rich and raising them for everybody else? That's what these so-called Fair Tax proposals do.

I'll tell you what, when taxes on the rich are increased to a point where the country's increase in wealth is distributed properly to the people responsible, you go right ahead and quit trying to be productive. I'll gladly step in and take the raise.

Re:Normally

[DarkOx]

First off let me start by saying I reject the implicit assumption that a regressive tax is some how unjust. I don't accept that anyone should be required to contribute a larger amout of their production just because they produce more. Infact I would say progressive taxation is unjust!

A pure sales tax hower as you say could exclude basic needs,

*food purchased in a gorcery store where the number one ingredient is not water or sugar,

*real-estate or rent where the buyer or renter will use it as a primary residence,

*passenger automobiles

*fares for ground transportation services

Everthing else should be taxed at a flat rate, and yes financial instruments as well, no capital gains, you buy 50 shares of ABC for $1000 and the tax rate is 10pct you owe $100 in taxes! you owe no more taxes when you sell it even if you sell them for $10000, but who ever it is you sold them to owes $1000.

Re:Normally

[ThatsNotPudding]

So if the poor person buys a pair of shoes and pays $3 sales tax on them, the same pair of shoes should rack up $300 for the rich person? In what world does that seem fair to you?

A world I can only hope for.

That's massively penalizing success and encouraging failure. how is anybody supposed to succeed if success is penalized?

Oh, yes; let us rend our clothes and beat our breasts, mourning for the now-extinct American Multi-Millionaire.

Re:Normally

[Skarecrow77]

so you're defining "poor" as "the inability to invest"?

There isn't a "poor" person in the country who couldn't manage to set aside say, 5% of his income to invest? I'd say that multitudes of employer-based 401k plans beg to differ.

The money is there. People choose to spend it on beer, dvds, magazines, clothes, gadgets, what-have-you. it's a well known phenomenon that "your expenses rise to meet your budget". you can see it again and again, as soon as people make more money, they find a way to spend it.

It's a failure of the individual, not the system.

or to put it more succinctly: "YOU RACK DISCIPRINE".

Re:Normally

[Skarecrow77]

In the world where $3 to a poor person is an equal proportion of wealth to $300 to a rich person. A person who only makes $3000 a year (number chosen arbitrarily for ease of math) is paying 1/1000th of their annual income in sales tax right there. If you have $300,000 in income, and pay 1/1000th of that, the pain felt is no better and no worse. That seems pretty fair.

Please explain how, in that world, there is any difference between making $3000 a year and $300,000 a year, besides the number of zeros you have to put in every monetary transaction. If everything costs the same as a percentage of total wealth, then everybody makes the same, relatively speaking. There is no such thing as "a raise". There is no such thing as "being a success". There is no success. No matter what you do, you can never get any better. You can never advance. There is nothing better to advance to. How bleak.

Additionally, as I keep pointing out, society has already tried that economic system many times, and it keeps failing as it is contrary to human nature (on the large scale). It's called communism. It hasn't worked, and it never will work until technology has advanced to the point where all material wants and goods, as well as services, can be conjured from thin air at will.

What are you, a miser? Holding on to money without doing anything productive with it does no good for anyone. It's prudent to save some money away in case it's needed, but generally money should either be spent or invested.

How exactly do you think the rich became rich? The money fairy didn't appear out of thin air, tap them on the head, and say "you're now rich" (not counting lottery winners), the vast majority saved their money instead of spending it, and invested it. Since when has spending less than you make been viewed as a BAD thing?! No wonder you're champion of the poor, you're defending the #1 mistake poor people make, spending more than they should!

Re:Normally

[pnuema]

Bullshit. You worked your ass off, AND GOT LUCKY. You didn't get sick, or have to take care of a relative. You had no financial misfortune to overcome. You were born intelligent enough to take advantage of opportunity when it came. I'm also willing to bet you are white, and a native English speaker. Working your ass off is not sufficient. Not everyone is as smart or as lucky as or as white as you, and to suggest that poverty is their fault ignores your own good fortune. Yes, it is possible to pull yourself up by your bootstraps. But it is also possible to work just as hard as you did, and have bad things happen to you. The whole "the poor are poor because they are not as good as me" idea was rejected with the rest of Victorian ideology. You sir are a throwback.

Re:Normally

[pnuema]

Says you. That's easy to say when you are on top. I say the government does have a role in making it fair, and since my vote counts just as much as your does, you can kiss my ass. What a dickhead.

Typical

[Beelzebud]

Another corporation that doesn't want to pay its share...

So what's the penalty?

[dkleinsc]

Last I checked, that makes Amazon tax evaders. They broke the law, and are now fugitives from justice. So I assume the state of Washington will be aggressively tracking them down and extraditing them to Texas for trial. Or maybe the state of New York will seize their assets on Wall St to pay the bill. Or maybe the feds will be getting involved and garnishing their profits.

Oh, wait. Sorry. That would be if a real person didn't pay a $269,000 tax bill. This is a corporation not paying a $269,000,000 tax bill, so they might get a slap on the wrist.

Re:They still owe texas money.

[Dan East]

Yes, but Amazon will no longer have a physical presence in the state, thus Texas will not be able to collect on any future sales tax. Texas needs to cut some sort of compromise deal with Amazon or they will lose out in the long run, but in lost revenue from jobs and physical infrastructure, as well as potential future sales tax.

See the problem is Amazon did not collect sales tax for Texas from those past sales, thus this money has to come out of their bottom line, instead of literally just taking money from the state population and giving it to the state government when sales tax is tacked on as normal.

Re:Normally - Equity

[Anonymous Coward]

You got it wrong.... sales taxes are the only legitimate tax since it is broad based, not avoidable, and needs no IRS and no government intrusion into personal privacy.

You can completely exempt all sales taxes on the poor by a prebate of the amount of sales tax up to the poverty line to everyone, so no one pays sales taxes on the basic necessities.

It is the Fair Tax -- fairtax.org.

Re:They still owe texas money.

[Dunbal]

Not only that, but it will make other businesses think twice about Texas, too. There's a law about taxation: the more you try to get, the less you actually get. Bankrupt and irresponsible countries, states and municipalities should correct their spending binges instead of looking for creative taxation.

Re:They still owe texas money.

[hedwards]

You mean like we in WA have been doing with MS? Right now MS owes our state just about enough money alone to plug our deficit. What we really need is for the federal government to step in and start doing something about the mess that is interstate commerce. States aren't going to be able to negotiate when they're faced with what is typically handled like the prisoners dilemma

Every state but one has a 'budget deficit'

[nido]

The only state that's NOT having budget problems is North Dakota. Ellen Brown says North Dakota is sitting pretty because they own the Bank of North Dakota.

See How the Nation’s Only State-Owned Bank Became the Envy of Wall Street.

All the other states are slaves to their financiers on Wall Street. For example, the City of Phoenix (Arizona) borrowed a billion dollars over the past 5 years to build out the water system. Now the water department wants to raise an extra $24million a year by raising water fees... 'Cause the usury always gets paid first.

I calculate that the interest charge on a billion dollars a year (at 5%) is $50million. If Arizona owned a bank like North Dakota, the Bank of Arizona would have financed the Phoenix water expansion (at, say, 3%). Most of the $50million the city is now bleeding out to Wall Street would instead be flowing into the state's treasury.

The financial crisis is easily fixable, with the right solutions. Money and the Crisis of Civilization, and ... Richard Clark's A Bailout for the People are also on my recommended reading list.

Re:Every state but one has a 'budget deficit'

[DerekLyons]

The only state that's NOT having budget problems is North Dakota. Ellen Brown says North Dakota is sitting pretty because they own the Bank of North Dakota.

And who is Ellen Brown and why should we believe her? (And I note you link not to her - but to an article that lays North Dakota's solvency on an entirely different cause.)
 

All the other states are slaves to their financiers on Wall Street. For example, the City of Phoenix (Arizona) borrowed a billion dollars over the past 5 years to build out the water system. Now the water department wants to raise an extra $24million a year by raising water fees... 'Cause the usury always gets paid first.

What does raising more money have to do with having borrowed money? (I.E. correlation is not causation.) That could be just as easily explained by unexpected costs (as is the case with my local water department, heavier than normal winter storms caused damage), or by poor planning (as I've also seen with my local water department).
 

I calculate that the interest charge on a billion dollars a year (at 5%) is $50million. If Arizona owned a bank like North Dakota, the Bank of Arizona would have financed the Phoenix water expansion (at, say, 3%). Most of the $50million the city is now bleeding out to Wall Street would instead be flowing into the state's treasury.

Maybe they could have, maybe they couldn't have - interest rates are a function of the cost of the money the bank loans to the water dept, not a function of numbers you've pulled out of your ass.
 

The financial crisis is easily fixable, with the right solutions. Money and the Crisis of Civilization, and ... Richard Clark's A Bailout for the People are also on my recommended reading list.

The only interesting thing there is that you didn't link to a gold bug site as well.

Re:Texas asked for it in the beginning

[MickyTheIdiot]

These tax breaks are the great folly of our time. They can bring in a large-looking number of jobs to an area and make a politician look good for a limited amount of time, then the companies bail and often the taxpayers got very little for their money.

It's amazing that everyone thinks that big business is what drives jobs. That's a joke. The real job growth comes with small business. Big businesses will soon just be only the elite people at the top ordering all their stock from the 3rd world sweatshops. They aren't going to save the economy of the U.S. Why aren't we spending our money to support these small businesses that actually care about their communities instead of giving these huge breaks to companies that will leave at the drop of a hat. My guess it all has to do with who have the most lobbyists.

Sales Taxes as implemented are anti business.

[LWATCDR]

They way that sales taxes are collected are really a pain for any online business.
The sales tax varies not just state by state but even county by county. And for an online order where to you charge from? I work in one county and live in another. I if I buy something online at my office do they charge the sales tax of the place where I order or where it is delivered to?
What about when I use my cell phone and I am on vacation and I buy an app or a song?
Should it use the GPS and decide?
If I buy a gift for my mother in law from Amazon should I pay Florida or Texas sales tax?
Sales tax and online sales just don't work well. And if it is a pain for someone like Amazon which probably could deal with it but a nightmare for any small company trying to do business on the internet.

Re:Other States

[Locke2005]

How that is considered enforceable is even more amazing.

Re:Texas Budget Deficit

[Maxo-Texas]

I didn't say I liked him or he was perfect. I said he *might* be a fiscal conservative.

Your pointing out that he is making spending cuts only agrees with that perception.

Everyone can say "oh we need cuts but in some other area".

In the end, the cut has to happen somewhere. We have a huge deficit coming up because of overspending and lack of wisdom about the economy never getting worse.

Re:Texas Budget Deficit

[jonsmirl]

It is not a loophole. It is a provision of the US Constitution that Amazon does not have to pay these taxes. Amazon has careful set up their ownership structure to avoid these taxes. Commerce_Clause This clause has been around 224 years so Texas should be aware of it.

It is the states that are trying to grab taxes that aren't theirs to grab. Texans are free to buy from Texas based merchants and pay the sales tax. Texas has a use tax so Texans are supposed to send in a sales tax equivalent when they buy from out of state. So blame the problem on Texans for choosing out of state vendors and then not sending in their use tax. I also suspect if the money grubbing states would ever put their use taxes up for a vote, they would all be immediately repealed since they are highly unpopular and hardly anyone obeys them.

The U.S. Constitution provides an essential protection against burdensome State regulation. The Commerce Clause uniquely empowers Congress “[t]o regulate
Commerce among the several States” and, as interpreted by the Supreme Court, bars States from burdening interstate commerce without specific Congressional approval. On the matter of State sales taxation, the Supreme Court has held, in the National Bellas Hess and Quill decisions, that the Commerce Clause bars States from requiring out-ofstate (a.k.a. “remote”) sellers to collect taxes on sales to residents within that State unless a remote seller has “substantial nexus” with the State. Otherwise, held the Court, the current sales tax regime is so complicated that such a requirement would impose an unconstitutional burden.

Amazon Tax

Re:Texas Budget Deficit

[eap]

The tax rate is 8.25% for many of the residents.

Plus property taxes are about $1,000 per $50,000 home value.

Our problem is the Perry sucks as governor in the same way Bush did.

Instead of being a true conservative, he was a spendthrift.

Dan Patrick (who is too socially conservative for my tastes) *may* be a true fiscal conservative which would be nice.

True, the myth of lower taxes in Texas is false. I moved from Texas to Colorado (generally assumed to be a less conservative place), bought a more expensive house, and make more money, but my overall taxes somehow went down. The services I receive have improved too.

Re:Texas Budget Deficit

[micheas]

Except, that Dell does it. Toys R. Us does it. Barnes and Noble does it. Amazon can do it. It's not onerous.

The point wasn't that it was onerous for Amazon, the point is that it is onerous for the part time, virtuemart, ubercart, oscommerce, and zencart distributions.

If there was a free feed established that every state that wanted the sales tax collected contributed to. Then this would not be unreasonable. As it is now, it requires a small staff just to keep up with the tax information.

If the states want this tax collected, then need to play ball and put their tax info on line in a standard format.