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Jeff Bezos Calls Sales Tax Requirements On Amazon Unconstitutional
Steve1960 writes "Amazon.com chief Jeff Bezos says the online retailer won't collect tax from most of its 90 million customers until Congress clearly mandates it. Although a growing number of states are demanding that Amazon collect and remit tax on sales within their borders, such demands are 'interference in interstate commerce' and prohibited by the Constitution, Bezos said."
...just buy a copy of the US Constitution on your Kindle and read it for yourself.
There's no -1 for "I don't get it."
Collecting taxes for multiple states will require that we spend money on employing people to review, understand, program, and monitor these activities.
Seriously. Just raise the income tax back to pre-Regan era levels. Problem solved. What are they going to do? Leave? They don't just stay here for low taxes, we've got 2 weak neighbors (Canada & Mexico) and a stable society that protects them & their money. Seems to me they should start paying for all that security and wealth, instead of balancing the budget on the backs of the poor.
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They get sales because people say, hey I can save 10 bucks on this just from lack of sales taxes alone!
And no state is about to go to the bother of enforcement on their end.
Of course, Amazon is full of BS about the obstacles and impediments to it, but that's just because they want their own interests, not because of any non-value in the issue with a sales tax system implemented by 50 different states, thousands of counties and cities, which is quite the bother.
Congress SHOULD get off its collective ass. They could set up a system if they wanted to do so. Not that it's a good way to collect taxes, but that's another matter.
This is really great. It's about time someone challenged this crazy ad hoc sales tax system and Amazon has the weight to do it. Well done Jeff.
Foolish people like to convince themselves this is true, but the reality is that if you raise income tax to Reagan era levels, you will raise about $800B/year.
Our deficit is $2.2T
So the question is, where are you going to cut the other $1.4T?
Its an ugly thing that progressives don't like to talk about. Thats where they start whining about hope and change.
Uh...you know Amazon doesn't actually pay your sales taxes, right?
If you don't know where you are going, you will wind up somewhere else.
You guys need to ditch your state level sales tax anarchy and just get a federally managed GST like, oh I dunno, Canada... Singapore... Australia... New Zealand... and other sane countries :)
The way the US does everything at the state level, with so many states, and every state doing its own thing, just truly results in anarchy...
You can tell how powerful someone is by the magnitude of the crime they can commit and be able to get away with.
I'm just waiting for the Constitution to be declared unconstitutional, at which point a dark vortex will begin swirling underneath Washington D.C. and devour the National Mall...
I suspect that there is a reason why Bezos sells stuff on the internet, rather than practicing constitutional law. If I've been following the case correctly, the states demanding action are states where Amazon has a business presence and a customer. They are simply making an intra-state demand that those doing business in the state collect sales taxes, per usual.
A state with no Amazon business would be on dubious interstate-commerce ice(though post Gonzales v. Raich virtually anything is arguably interstate commerce); but saying "businesses wishing to conduct business in this state must abide by state laws" is hardly a bold arrogation of interstate powers. Bezos is, shockingly enough, just protective of his ~5% advantage over the B&Ms...
Bezos is right. Back in the days of catalog sales, the US Supreme Court decided that only those companies with a legal presence in a particular state are required to collect sales tax from the residents of that state. Unless the Federal Government steps in, there's nothing any of the states can do to compel a company to collect sales tax for states where the company has no such presence.
"In prison you just have to shut your eyes and take it. Here you have to shut your eyes and give it."
Bezos needs to stop bitching and just realise he's fighting an uphill losing battle he's going to inevitably lose.
Most of what amazon sells is manufactures overseas (read: China) and Amazon is already somewhat international with presences in other countries, he should just move the Amazon warehouses overseas and be done with it.
*Even if it means going to Mexico or something :)
Disclaimer: I'm an Aussie and don't know anything about the rules of shipping and selling items in the US coming from warehouses in Mexico or elsewhere in the world. But I assume there's no sales tax.
You can tell how powerful someone is by the magnitude of the crime they can commit and be able to get away with.
As a consumer of course, I like making purchases online w/out sales tax.
Further, as a small business owner that does a portion of our business (photographs) online, I think it does not make sense to have to collect sales tax for the states...Amazon actually has the infrastructure to support all the different taxes that would be in place, but for us small-fry businesses it would be more of a burden.
This is an issue of residents not paying there taxes to the states where they live, and the states not having a good way (apart from voluntary tax filings) to get residents to pay. That should be their problem, not the one of out-of-state businesses
Quill Corp. v. North Dakota
"In prison you just have to shut your eyes and take it. Here you have to shut your eyes and give it."
GST/VAT/etc. Problem solved. Don't like paying taxes? Secede.
Amazon's got a right to get over on taxes, while its competitior must pay?
Doesn't sound like a fair marketplace to me. Looks like Bezos wants all the government infrastructure support for free--He wants his competitors to pay for the infrastructure.
' “We’re no different from other big chains of retailers,” Bezos said. “They don’t collect sales taxes in states where they don’t have [employees], either.” '
They also don't sell merchandise in those states to consumers.
I do sympathize somewhat -- it seems like a bit of a burden to any online retailer to have to log and track sales tax for every single state in the United States in order to do business online. However, simply selling your product directly to consumers also shouldn't exempt you from having to pay sales taxes, either. I feel like there should just be a separate tax pool for online sales, essentially creating an imaginary taxed "online" state, the funds of which could then be proportioned to the various states on a per-state percentage.
Or perhaps we could drop sales taxes in general and just submit to a higher tax rate in this country. No, that'd be silly...
Bezos is, shockingly enough, just protective of his ~5% advantage over the B&Ms...
If Bezos has an advantage, it is in the dishonesty of his customers. Amazon buyers are required to pay the tax themselves if Amazon does not collect it. Personally, I find it more convenient to have businesses calculate, collect and remit these taxes than trying to go through all that hassle myself, but that is only a problem for the vanishingly small percentage of on-line buyers who understand and obey the tax laws that apply to them.
Who are they going to get to do all of their work for them? Any competent businessman will hire the people needed to do the work. No more, no less.
Amazon is not asking to be treated any differently than other mail-order type companies. Some states who are dealing with budget issues are looking for ways to generate additional revenue and are trying to force Amazon to collect state sales tax even when Amazon doesn't have a presence in the state.
Expecting web sites to keep track of local tax codes isn't realistic. In Nebraska, where I live, we are supposed to self-report these purchases and pay taxes on them although virtually no one does. If the states want to tax online purchases, they are going to either pass something at the federal level or try and get Amazon to report all purchases to the state and then send a bill to the individual taxpayer. States won't do this, because it shifts the burden from the retailer to the state (which is where it belongs, IMO.)
How about an internet surtax of, say, 5% on top of any state tax? Or a flat internet tax of 15%?
It's past time that internet businesses need government handouts to survive, especially Amazon. And we who are watching teachers, nurses, fire and police - or other vital local services - being laid off or threatening to stop pensions because tax revenues are falling are demanding that businesses who don't need subsidies not get subsidies.
Congress can slap on whatever taxes it feels is appropriate.
And internet businesses like Amazon that contribute nothing directly to local economies (unlike bricks and mortar retail houses) might need extra tax to exist globally but operate locally.
I seem to recall some leaders that you undoubtedly admire tried that a couple of generations back along with the scapegoating you seem to have borrowed from them.
First post! This is supposed to be the first post an hour ago, but stupid lame slashdot system didn't allow me to post! So, first post!
If they did they would have to either go to a country that expects them to pay more for the services they use, or do without all of the niceties that taxes provide. Self important blowhards like this would never stand for having to do anything themselves or living without their infrastructure.
It's not that Amazon pays the taxes. The customer is supposed to, per each State's law. Purchases you do online from an out-of-state vendor, should be reported on your state tax forms, and you get a tax obligation on them.
A successful API design takes a mixture of software design and pedagogy.
State Politicians have robbed and stolen all the money they could, now they need amazon to collect some money so they can rob and steal that.
http://en.wikipedia.org/wiki/Complete_Auto_Transit,_Inc._v._Brady
Two questions:
1) Does the use of outside businesses for shipping constitute nexus on the part of Amazon? Probably not.
2) Although Amazon forwards packages to these states, are they using any public services in said states outside of the shipping company? Not really.
Truth be told, I think he's got a point under the current law. Simply sending a lot of packages to a place doesn't constitute owing that place a tax, at least on the part of Amazon.
I think there is some murky ground when it comes to what the customer should or shouldn't be responsible for in terms of taxation, but I don't feel it is Amazon's responsibility to collect this tax by force.
The US Budget is $3.7T this year, of which 2.2T is deficit spending.
The DEBT is closing in on $14T and growing at over $2T per year.
If the DEBT was $2.2T, we wouldn't even be having this discussion. We'd pull out of Iraq and Afghanistan and that would be the end of that.
hile raising taxes $800B/year will cut about 1/3 of the DEFICIT, it still leaves you falling deeply into DEBT every year. You probably just bought yourself another 2 years before having creditors bail on the US government.
So the original question still stands. What are you going to cut the other $1.4T? I agree the foreign wars have got to go. So lets say that saves $400B (its less) per year.
What are you going to do to cut the other $1T/year?
Time is wasting. Its got to be Medicare bunky. Its the only program that is big enough to matter.
Amazon is in Washington. If it sells something to someone in Washington, it charges sales tax. If it sells something to someone outside Washington but in a state where Amazon has some sort of presence (like a warehouse), they charge sales tax. Any other state, they charge no sales tax.
Their competitor is in some state. if it sells something to someone in that state, it charges sales tax. If it sells something to someone outside that state but in a state where it has some sort of presence (like a warehouse), they charge sales tax. Any other state, they charge no sales tax.
Seems perfectly fair to me. The disparity arises when you're comparing a mail-order/internet business to a brick and mortar business. The brick and mortar business sells primarily to people who live in the state, the mail-order and internet businesses sell primarily to people who live outside the state. Fundamentally, the problem in that case is that the state's sales tax is too high, and thus puts the brick and mortar business at a competitive disadvantage. But for some reason it always seems to get portrayed as Amazon having some sort of unfair advantage. If the state is unhappy that its businesses are at a disadvantage due to high sales tax, the direct solution within their power is to simply lower their sales tax.
If the states want their cake and to eat it too - keep their high sales tax but level the playing field - it's going to take an act of Congress to do it. Bezos is correct that the Constitution explicitly prohibits state taxation of interstate commerce. Only the Federal government has that power.
Congress can pass an unconstitutional law. It remains in force unless and until the judicial branch overturns it. Besos is correct that he would have to follow the law until that happened.
Well then the competitor has a worse business model.
Yesterday was a perfect example of this. I am buying landscaping right now, and was pricing out bushes. The same bush that sold for $35 per bush at Home Depot, was selling online for $25 FOR TEN.
I am looking to do my job with the lowest cost to me, for the best quality. I am not looking to pay my money to subsidize a giant brick building being used to hold outdoor plants indoors.
It's that whole 'vote with your wallet' thing that people keep complaining that they are unable to do with the local phone/internet companies. Yet when they can do it, its suddenly unfair to the business that doesn't get chosen?
They need to bring us back to something like Upton Sinclair's The Jungle. Then maybe, just maybe, we'll see a rebirth of true Progressive politics in this country. Hint--the current regime of organized labor isn't Progressive in that sense. The original Progressive movement grew out of muckraking reporters literally revealing the immorality of what was then an almost entirely laissez-faire system. It just so happened that at that time the wrongdoers were almost entirely Capital. This time, there are plenty of wrongdoers on Capital, but in Labor also. The new muckrakers (bloggers) need to route out both forms of evil.
Somehow I doubt progressives would object much to, say, Alabama seceding.
Look, Competition is what drives innovation and it has fostered every new innovation we have. What bothers me is that Congress and States start to look at the Internet as this new cash cow for revenue. Fair enough, as more and more businesses go to Internet sales models, a lot of sales and use tax revenue has gone out the door, constraining tax revenues. Bezos is merely trying to protect his turf no differently than American Airlines tried to put Love Field out of business. It's called competitive advantage and there's a hidden cost of Internet only businesses. While we may consider it progress if a local business store goes under because a new WalMart moves there's one thing that remains, at least jobs, sales tax and property tax revenue. This helps pay for local government. If a bricks and mortar store like Sears sells me something they have to collect sales taxes for my state even if I buy online. Why is Amazon any different in this case? Because it has distribution centers instead of stores? Don't get me wrong, I buy a lot from Amazon.com and price isn't the only differentiation. If they started charging me local sales tax, that's fine as long as it goes to help pay for my local services that my sales taxes already support.
But, let's not just single out Internet sales channels. The whole mail order sales tax issue should be resolved and if you buy something out of state or have it delivered to your state you either pay an origination sales tax or sales tax based on where you live. That makes it fair for the Internet stores, the bricks and mortars and all mail order businesses. If I buy something overseas and have it shipped here I have to pay "duty" which is a sales tax so how again should Amazon be different. They were given a break to foster growth and now I think the time has come to end that shelter.
If we don't do something like this, I fear Congress (in the form of Orin Hatch and his cronies) will mandate an "Internet Sales Tax" that will wind up in DC and not go to the states where it's needed the most.
Harrison's Postulate - "For every action there is an equal and opposite criticism"
Amazon does pay taxes in states it has operations in. That's why I've set the billing address for my Kindle to the Canadian Consulate in Washington, D.C. rather than one in Washington state.
I remember learning a very interesting thing about laws -- they come in five parts. intent, policy, enforcement, prosecution, and defence. If any one of those five fails, the entire law falls apart.
This seems to be one of those scenarios which depicts this concept quite well. The intent of no interstate tax was something akin to supporting a larger economy, especially when there wasn't a big enough market to justify local production. It winds up offsetting shipping and other acquisition costs too. But when a company like Amazon sells to another state, more than the customer is remote. The sale itself is purchased from the customer's home, the charge is done by the e-commerce gateway directly, and the shipment comes from a warehouse local to the customer too. Even the web servers serving the web-site are often geographically proximal. So the only thing "interstate", as he says, is the owner of the company.
The intent of tax was to garner dollars for societal spending as a percentage of dollars spent by society. Makes sense. In a day and age and company where 90% of household personal spenditures can be from a remotely-owned company, that policy needs to change in order to support the intent. Otherwise society will starve.
However, until such time as policies change, Amazon has that last aspect, defence, to ruin the entire chain. Hey, I'd do it to. Hey, I actually do indeed do similar with my company. The difference is that I'm in a country able to adjust quite differently.
But this goes back to what I said the other day. The US spends a lot of tax-payer money fighting tax-payers who don't want to pay taxes. It's an amazingly complex and expensive waste of time, money, and frustration.
I believe there exist states that do not have state sales tax. If Amazon was to move all its functions to those states, they would not have to charge sales tax to residents of those states, and because of the interstate commerce clause they wouldn't have to charge sales tax on stuff exported to the other 45 stateMore and more online purchases are for digital downloads, licenses, and other online services these days , they can't tax that.-
Why would they lay people off if these people are making them money? If the government takes a little bigger chunk of profits, the logical thing would be to hire more people to make up the difference.
Because the marginal cost of a given employee exceeds the marginal value, and therefore they become a net loss to the business. It's a straight cost/benefit calculation.
The same goes for unfunded government mandates for workers comp and other per-worker costs to the business: if it costs me 75% to pay two people time and a half for 4 of 12 hours, my cost has gone up by only 1.5 times the hourly cost times two plus fixed costs I would be out no matter what. As long as that amount is less than the regular hourly rate, which it is - the actual pay-out to an employee is far less than half my cost of employing another person - then I'll just work the people I have harder.
This is the same reason most small stores have closed, and that there are no unskilled labor jobs available for minors whose employment would cost the local minimum wage floor per hour to push a broom. It's much easier to pay someone here illegally a smaller amount in cash under the table, since it's not like they can report you without putting themselves at risk of deportation. Have fun selling drugs instead.
There are tons of places in the SF Bay Area where it's common to use undocumented restaurant workers and day laborers, rather than pay the rather usurous local minimum wage and insurance and FICA and SS witholding.
There are also tons of places where the workers are hired as "independent contractors", which amounts to the same thing, since they are responsible for paying their own taxes and so on. Almost every spa, salon, gym, or other industry, including commissioned sales, tends to operate this way.
-- Terry
Amazon pays it's fucking taxes you jerk. It doesn't collect taxes in states on behalf of state government because it's not required to by Federal law. Don't like that fact, then fuck off and change the law. Otherwise, on with you business. (and how much have you sent to your state tax collection agency for stuff you bought on line and was delivered tax free.... oh, yeah, none. It's a long way to the ground from your high horse isn't it)
Rich people are eccentric. Poor people are strange. Me, I'd be happy with odd.
By using a forwarding service from a state without sales tax (e.g. Oregon), consumers in any state can avoid paying sales tax, even if their state demands sales tax from online retailers. Many Californians do this. See http://bit.ly/fPJwNH
Which competitors? Amazon isn't competing with local businesses. It is competing with other online businesses. Local businesses compete with each other for in store purchasing opportunity. If they don't also have an online store then they should open one with Amazon or EBay.
A fool throws a stone into a well and a thousand sages can not remove it.
The fact is the tax is due in the various states whether it's the purchaser who is supposed to report it or the retailer. I think what the various sales taxing authorities need to do is get together and create an internet clearing house for sales taxes that can determine the sales tax owed based on zip code. Then when an order is placed with an online retailer they send off a data packet to the clearing house with the UPC, amount and zip code and the clearing house returns the amount of sales tax to add to the bill. Once the sales transaction is completed the retailer sends a confirmation message to the clearing house. Then weekly or monthly the retailer sends a check to the clearing house for the amount of sales taxes it has collected (I'd even be willing to let them keep a small portion of it as a service fee) and the clearing house takes care of disbursing it to the appropriate taxing authorities. The clearing house would be paid for by taking a small cut of the money it collects.
I live in Oregon which has no sales tax but it seems unfair to local businesses in sales tax states that they have to compete with on-line businesses that don't have to collect the tax. You may argue that it's ok to avoid taxes when you can but it just shifts the burden to others when you avoid it, not a moral position that I can defend.
The Constitution says very explicitly that States are forbidden to tax imports, unless
1. They get permission from Congress to impose the taxes, and
2. The proceeds of said taxes (after inspection costs) go to the Federal Treasury. (Not the State one).
"Use taxes" satisfy neither Constitutional requirement. The States are lucky that the Supreme Court merely refuses to force out-of-state vendors to collect them, and that the Supreme Court has not ruled them to be unConstitutional (do not pass Go, do not collect $200).
As to why the Constitution imposes these limitations on States, this has to do with the trade wars between States that led to the demise of the previous Constitution (the Articles of Confederation). The States had shown that they could not be trusted to behave in a grown-up way with the power to tax interstate commerce, so that power was taken away from them and given to the Federal Government in hopes of ending the fighting.
You know it is possible that the parent has no sales tax obligation. Some of us live in states and localities that don't levy any sales tax.
Why should we have a fair marketplace? Capitalism isn't fair. Is it fair that I have to purchase my groceries at a higher price than the grocery stores can? Further, those stores profit from me. How is that fair? They profit on basic necessities of life. Farmer's markets aren't even fair solution because the farmers still sell their wares at a profit.
Marketplaces never are fair. The most fair they can be is with monopolies because then everyone ostensibly has access to the same goods at the same rates. But then you could argue that it's not fair for the poor because they have to spend more of their money (as an overall percent of their incomes) on stuff than the wealthy do. Then we start "progressive" actions (taxes or whatever) that inordinately affect the wealthy more than the poor. All the sudden we have a situation that is not fair for the wealthy - they are "punished" or their wages are garnished at higher rates just because they committed the great sin of being wealthy.
My point with all of this is that arguing against Amazon based on what is or isn't fair is entirely subjective. I'd argue that not only is fairness not feasible, it is not desirable either. Yes, it would be nice if everything could be fair but again, fair is in the eye of the beholder and what is fair to one person isn't necessarily fair to someone else.
This problem is older than dirt. Bezos is far from the first one to point it out.
47% of American households do not contribute to the federal budget.
That's just plain false.
40% of the federal budget comes from payroll taxes. That's a 15.3% tax on all wages up to about 90k or so. It's 2.3% after that. It's 0% on rich people income like dividends, capital gains, interest, etc.
The poor may not pay income taxes... but they don't have much income. The rich don't pay payroll taxes, and they have a ton of income.
If you add it all up, the very, very poor come out at about 0 on taxes. Once you get into the lower middle class, federal taxes are pretty much flat-rate from then on - income taxes go up, tax breaks go up (like home mortgage deductions), payroll taxes go down, and more income comes from "favored" means like dividends and capital gains that are taxed at very low rates and interest that doesn't get a payroll tax.
paintball
If the states don't think it's fair, they can immediately repeal their sales taxes. They can adjust income and property taxes to milk more cash out of their constituents for their wasteful and corrupt budgets. But since those taxes affect their rich friends, they would rather lie and violate the law.
Should we give tax breaks to people who create jobs (especially 6 figure salaries), tax revenue and wealth?
We should. But if we really want to give a tax break to people who create jobs, we would eliminate the Federal Job Tax, the 15.3% tax on jobs, and replace the revenue with an income tax. Then the people who actually *DO* create jobs get a huge tax break, and the people who are replacing American workers with machines or Chinese workers or Indian workers don't get a tax break.
Anytime someone says that they will create more jobs if you lower their income tax, they are LYING. They are trying to trick you. The more you lower their income taxes, the greater incentive you provide for them to ELIMINATE jobs, because instead of keeping 50% of the money they save by shipping a job to China, they now get to keep 70% of the money they save!
So, yes, we should absolutely lower taxes on job creators. And the only way to do that is lowering the JOB tax, not the income tax.
paintball
No, In states where Amazon has a physical presence they pay taxes. In states where they do not,they do not. This is not new. The states tax business to pay for the infrastructure like roads, fire protection, police, etc. If Amazon is not located in the state, then they do not use these things. They do, however, pay huge taxes in the states where they do operate. These other states want a slice of the pie without ponying up anything.
If the money of rich people is held in the bank then the bank lends it out. It never leaves the economy.
One thing that we are seeing is that wealthier and people with higher incomes are saving a higher percentage of their income. Banks have also greatly increased their reserves, i.e. they aren't lending out all of the money that they are legally allowed to. Additionally, derivative securities markets have shrunk significantly. Thus, there is much less money circulating in the economy because financial leverage creates money.
Hm, ok, well, zero out the sales taxes and replace them with a single, easy-to-administer, "Bezos Tax". Problem solved!
p.s. if there's still a shortfall, an Ellison Tax and a Jobs Tax should round things out nicely. [A few years ago I would have included a Gates/Ballmer tax too, but these days, well...]
We live, as we dream -- alone....
Fundamentally, the problem in that case is that the state's sales tax is too high, and thus puts the brick and mortar business at a competitive disadvantage. But for some reason it always seems to get portrayed as Amazon having some sort of unfair advantage. If the state is unhappy that its businesses are at a disadvantage due to high sales tax, the direct solution within their power is to simply lower their sales tax.
That isn't the problem, or at least certainly not the whole problem.
They want the money and they have no ability to effectively collect it from the person whom the courts regard as obliged to pay it: the customer.
why is there this blinding need to put more tax burden on regular people when huge corporations like GE, Goldman Sachs, and Exxon are making record profits and paying no taxes.
The Constitution prevents States from stepping on the toes of other States or the Federal Government. The Supremacy Clause only comes into play if there is a national law which can take supremacy over a state law.
Don't get me wrong -- I like not having to pay sales tax when I can avoid it -- but companies also must play a role in their local communities. If Amazon has a warehouse in State X, and a citizen in State X buys something from Amazon, then heck yeah Amazon should have to charge sales tax on the item. Those monies help go to improving that state's community, a community Amazon is part of an who's protection and benefits Amazon enjoys.
Amazon's warehouse benefits from the local roads, the state roads, the power grid, the emergency services, the water, potentially the tax law, other laws, the justice system, etc.
On top of Amazon's benefit, there is a benefit for the citizen.
It's always nice to pay less for things. However, one thing I've learned as I've grown older is that you also get what you pay for. Often, when you pay less, you also get less.
1) Tax consumer inbound shipping and make the carriers collect it; they can because it is easy for them compared to the logistics they already handle so ignore their bitching.
2) Tax based upon insured value with a minimal scale. Amazon would likely opt out of shipping insurance.
Result:
Local businesses which contribute more to the your economy can compete with out of state businesses who do not pay tax.
States who have been gradually robbed of income have less budget issues (although the economy is the primary cause of the current problem.)
The environment will benefit from less distance shipping. Shipping will go down a little but will have a measurable difference in the wear on the roads we pay for.
Foreign items will likely also go slightly down over local items, also boosting the economy but in a smaller amount than returning to the times of tariffs on imports and the economy was sound...
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And Target figures out the sales taxes quite easily. And they sell items that are taxable in some states (clothing for example), but not others.
Other web sites - Sears, Wal-Mart, etc.all manage to do this. It's got nothing to do with difficulty, it's Amazon not wanting to lose an advantage. By the way - Amazon could make money via their merchants program by making it more attractive to small internet retailers that don't want to handle computing tax themselves, or providing a paid SaaS service to compute sales tax for other sites.
It is time to finally resolve the question of mail order businesses. It affects not only taxes but consumer rights. The most logical position is that the customer is going to the business, not the other way around. An online business just illustrates the absurdity of regulating from the point of a customers location. Simply put it's absurd that a business need to know and comply with the local laws of every location on the planet. Even with computers it's a monumental task and it only creates a huge barrier of entry for small businesses. It can easily be said that when we pay for shipping and handling we are paying for a proxy to purchase and ship an item on our behalf. And such a simple thing as buying a $10 ash trey should not require a full power of attorney.
I believe state sales tax laws were written in a broad way to imply that their citizens are responsible for paying sales tax even when they are out of state even though that is clearly interstate commerce and the province of the federal government. The question at hand is jurisdiction. You either decide that the transactions take place at the point of sale or find justification to promote them to international much like ships at sea and require them to register a regulatory location.
The states should lose no matter how it happens. But the states only care about getting money, not principles. So their best tactic is to generate more income though income taxes or persuade the federal government to allow interstate import taxes.
What government infrastructure does he want for free? Let's focus in on one state, New York. (I happen to live in this state so I know the most about this particular situation.) Classically, you needed a physical presence in a state before the state could charge you tax on your sales. So if I set up shop in New York and sold goods online or via a catalog, I'd have to charge NYS sales tax. If I set up shop in New Jersey, though, and sold my goods the exact same way, I wouldn't have to pay.
Now, Amazon doesn't have any physical presence in the state. No warehouses, employee offices, nothing. As such, they aren't using any government infrastructure. The only time Amazon.com "touches" New York State is via the Internet (paid for on the customer's end by ISP bills and on Amazon's end by their bandwidth bills) or when goods are shipped (shipped via a package delivery service who pays any appropriate NYS taxes). Amazon isn't using any NYS resources for their warehouses or employee offices, though, because none of those are in New York.
What they do have are affiliates. People who put Amazon ads on their websites and get a cut of the sales that are generated. New York decided to redefine "physical presence" to include these affiliates. I happen to be one of these affiliates (though I don't think I'm too biased because it hasn't generated any money for me). I'm not employed by Amazon. My house did not suddenly become an office for Amazon.com. I'm just a glorified ad partner. I run their ads on my site and they pay me for it based on the sales leads generated.
If you claim that affiliates = physical presence then you might as well claim that running any ad in New York State = having a physical presence in NYS. Did Microsoft just run an ad for Windows 7? Time to tax them for their sales. Did Intel run one of their chip ads? Tax them too. A new movie being advertised in theatres? Time to tax the movie studio, production company and any/all companies that worked on the movie regardless of where they might be located.
This kind of action has been tested before in the courts and it has failed. States can't simply tax companies which are completely located outside of the state's borders.
My sci-fi novel, Ghost Thief, is now available from Amazon.com.
after the high marginal tax rates of 1981 were cut, tax payments and the share of the tax burden borne by the top 1 percent climbed sharply. For example, in 1981 the top 1 percent paid 17.6 percent of all personal income taxes, but by 1988 their share had jumped to 27.5 percent, a 10 percentage point increase.
The share of the income tax burden borne by the top 10 percent of taxpayers increased from 48.0 percent in 1981 to 57.2 percent in 1988. Meanwhile, the share of income taxes paid by the bottom 50 percent of taxpayers dropped from 7.5 percent in 1981 to 5.7 percent in 1988.
Look, I'm simply fed up and exhausted with people such as yourself endlessly spouting these same statistics about the supposedly ever increasing relative tax burden on the rich and how this supposedly makes everyone with a 7 figure income some kind of martyr. Claiming or even unequivocally proving that the rich account for higher percentages of total tax paid today than yesterday does not amount to proving that the rich are getting screwed or that their taxes are rising at a faster relative rate than other people's.
What percentage of all personal income earned by US citizens do the top 10% make, today vs. yesterday? The top 1%? It's complete chicanery to bemoan the rich paying an ever increasing percentage of the tax pie without addressing whose income is rising and whose is falling. If the rich have been claiming an ever increasing percentage of total gross income earned by US citizens then no shit their taxes should be going up. That is, in fact, the claim of every liberal economist in the US: that the relative wealth of the top 1-5% continues to increase by a couple points per year while the middle and lower classes have experienced year-over-year losses in relative economic power for 39 years straight (I seem to recall claims that 1972 was the modern-era maximum for purchasing power and financial stability in the lower 90% of earners).
Convince me that the rich don't have all the money and then I'll agree that they shouldn't pay all the taxes.
The 1993 Clinton tax increase appears to [sic] having the opposite effect on the willingness of wealthy taxpayers to expose income to taxation. According to IRS data, the income generated by the top one percent of income earners actually declined in 1993.
There shouldn't be any fucking choice about whether you "expose" income to taxation! If it's income, it gets taxed. This quote in comparison with your other choices amounts to admitting flat-out that while claiming they're sad little martyrs who pay all the taxes for everyone the rich are simultaneously hiding money from taxation. I can see things like a slightly lower (and by "slightly" I mean "sure as fuck not 20%+ lower") capital gains rate or a respectable deduction for capital gains to create investment incentives, but there should be no category of income, no method of accounting, that makes millions of dollars totally tax free.
...he just registered on /. when he was 6
Donte Alistair Anderson Roberts - hi son!
Karma: Chameleon
A total dbag.
It seems to me to be completely the opposite. Now I know why Jeff Bezos is the CEO of Amazon. His ability to put his credibility on the line in a bold faced attempt to redefine reality is astounding. I sure hope that he has the best legal minds in the world at his disposal, for only a legion of lawyers could "legally" redefine the truth in such a 180 degrees away from reality manner.
Amazon is the epitome of interstate commerce. They collect money from residents of all fifty states (and probably some non-American business from over seas as well) and they ship goods to people in all fifty states. Now given that the Federal government has pinned the entire premise of their enforcement ability on "interstate commerce". The UCC is all about regulating interstate commerce.
This case is going to go to the Supreme Court, and the court is going to have to strike it down in favor of the government. Otherwise, the Federal government will never be able to tax or regulate commerce on the internet.
As much as I dislike the government, I am going to have to root for Uncle Sam on this one. Corporations already have enough tax dodges. Jeff Bezos can cough up some of the millions of dollars he made last year. His senior management can cough up some of the hundreds of thousands of dollars that they made. The majority of that money can disappear into the beast that is the Federal government, and in the end some of it might trickle down to the states.
The country would be better off if Bezos would recognize that we all live in the same country and just pay his taxes to the states that are asking for them. Instead he is paying a bunch of lawyers, which I guess is okay, it's "his" money as he represents the shareholders. The fact that the both the state and Federal governments are wasting money on their legal department to chase after him is not okay. They will recoup the costs, because they will win. But that's besides the point, because winning will take years and waste Lord only knows how many tens of millions of dollars, and untold hundreds of thousands of hours of people's time.
There are much better uses for that money, both at the state and Federal level. Last I checked, a good third of the country is flooded right now. I wonder what portion of rebuilding cost could be covered by what Amazon + numerous states + the Feds are going to pay on legal fees.
I'm sorry, but this is another example of large-scale corporate tax avoidance. Every week, we hear stories about how state, local and even the national government is swimming in debt. When large US-based corporations are able to avoid collecting taxes, it is yet another sign that the US economy is in failure mode. The taxes you pay keep your roads repaired, pay for public schools, police, fire and other benefits. If large corporate institutions are able to weasel out of paying taxes, guess who the tax bill falls on? You, citizen.
Until corporations are held liable to pair their fair share of taxes, the US economic system will continue to remain deep in debt and all of us will end up with the bailout bill. GE, I'm looking at you too... if anyone remembers, there was a news story not long ago that GE's 2010 corporate tax bill was $0. ZERO! A corporation that makes billions in profit paid no taxes in the US last year. How is this fair? Why do we continue to let big corporations make vast boatloads of money, yet contribute nothing in taxes to help society as a whole?
Uhh, here in Washington you WILL pay sales tax when you buy from Amazon. And Amazon does pay all State-required taxes, as well as all Federally required taxes. This is a case of States where Amazon does NOT have a presence insisting - unconstitutionally - that Amazon collect sales taxes for them.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
In Michigan, if you buy something physically in another state, or use a mail order or Internet retailer to make the purchase, if you're not taxed at least 6%, you have to claim that purchase on your state income tax. Wisconsin has a 5% tax, so if I make a purchase there, I have to pay the 1% to Michigan that I didn't pay to Wisconsin when calculating my income taxes each year. This is called "use tax".
http://en.wikipedia.org/wiki/Use_tax
Since Amazon doesn't have a physical location in Michigan, they don't collect the taxes, but I still have to pay them. Anything from their website that I purchase needs to be tallied up at the end of the year, along with anything else that I buy online. My state is nice in one regard. "A Michigan taxpayer with $45,000 of income can use the state’s use tax table to estimate his use tax liability as $36. Use of this table is limited, however, to purchases of less than $1,000 and may be challenged during an audit. For purchases over $1,000, the taxpayer must calculate the tax for each item and add this amount to the use tax from the table." (from the Wikipedia article) Assuming that I haven't made any major, untaxed purchases online in the year, it's just easier to consult the table and pay the tax while filing my return.
I'm just waiting for the Constitution to be declared unconstitutional
They'd have to acknowledge its existence to do that, they'll just stick to what they've been doing: Ignore it.
Can some one explain this to me. I live in a state that bans the shipment of liquor and wine from other states. How is that constitutional? They are clearly interfering in interstate commerce.
Thanks, Jeff. Sales Tax has been under the individual decision of each state for awhile now. Thanks for trying to drag Congress into this and get them to meddle even more with State's Rights. Jeff, you rock. Would Totalitarian Fascism suit you better?
nitpick solved.
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So the Beezer won't collect taxes, eh? So how come I get charged taxes on everything I buy from them, even if it's shipped from outside my state (NY)? In terms of fairness, if you support sales taxes, you should support, say, collecting them on cigarette sales to non-Indians on Indian reservations. Find me a coffin nail puffer who supports THAT.
Get rid of all taxes as they exist now.
Establish a 15% flat income tax (income is any money had this year, that you didn't have last year).
Establish a 10% VAT tax.
States who participate in the federal program and have no other taxation get a cut of the collected taxes from said state. States what do not participate in the program and DO still tax at the state level simply don't get a cut, but still pay the same as every other state.
There are NO deductions, write offs, exceptions, exemptions AT ALL FOR PERSON, NOT FOR PROFIT or COMPANY.
"In God We Trust, All Others Pay Cash"
Maybe in California, but not my state. The GP is correct. Most states require residents to pay USE tax on out-of-state purchases just as GP said. Coincidentally, use tax exactly equals the amount of sales tax which would have been paid had the purchase been made in state. You are required to declare purchase valuations and pay the use tax on my state's income tax form. There is no sales tax levied on out of state purchases. There cannot be because the sales transaction occurred within another state. This is precisely why the tax has a different name. Otherwise it would be struck down in Federal court as an attempt to tax interstate commerce.
You are partially correct though. It is unconstitutional for a state to require an out-of-state party to collect either sales or use tax for an purchase. This is Amazon's assertion and it is legally is sound. The only question is whether or not their associate subsidiaries meet the legal definition of state presence.
In an early case, the Supreme Court ruled that the power to tax was equal to the power to destroy. So, there should never be a tax on books or newspapers or magazines. If he is looking to avoid taxes on the print material they sell, good for him, I'm glad someone finally figured it out. If he is looking to duck taxes on other things, suck it up man.
Then they need to live within their means. Unfortunately though, most people don't understand this and think they are entitled to what they haven't EARNED.
they would be in prison for the fraud, crimes, tax evasion, etc. that they have committed. No rich person earned anything 100% on their own. Other people contributed to their success. I would love to see those rich Wall Street bankers get their well earned prison sentences for destroying the banking industry for their profit.
Generally, McDonalds does not sell mail order, so your sales transaction occurs in person. Since your transaction occurred in state, you pay sales tax. McDonalds may not have to pay sales tax on their Nebraska cow if the beef company had no presence in yours/McDonald's state. Do you understand now? Wishing things worked the way you want does not change the actual locality of the transaction or the taxation base.
(income is any money had this year, that you didn't have last year).
If I lost money do I get money back?
“Common sense is not so common.” — Voltaire
Maybe that can put I'd rather be an asshole than a bleeding heart on your tombstone when some starving poor or sick person caps your ass when they rob you looking to feed themselves.
Personally I would hate to see an Internet sales tax, but in this day and age when most of the 50 states and the Feds are borderline bankrupt. I would go for a small sales tax of say 5% on all Internet sales and do away with the taxes states charge on buying groceries and other basic needs. I am not sure where Jeff Bezos is getting his info but I have read the Constitution many times in college for my American History degree and I don't remember it saying anything about sales tax being illegal.
The real issue here is craven bureaucrats and politicians that would rather illegally use out-of-state corporations as their tax collectors than collect taxes from the citizens in their state. There is a reason that these are almost always referred to as Sales and Use Taxes. This was mentioned briefly in the article. Molst states that have a sales tax also have a use tax that is supposed to require citizens and in-state businesses to pay taxes on items that they buy from out of state. Most states do a good job of enforcing this requirement on large businesses, but have had virtually no enforcement with smaller businesses and individuals. So, instead of attacking the problem directly and having a real debate about the declining sales-tax revenues and what to do about it, they're trying to force Amazon to collect tax. You watch, eBay will be next - and craigslist. It's a real problem, but our politicians should do what they are paid to do and find a real solution, not just an illegal band-aid.
Simply end the sales tax entirely. Then not only is this not an issue anymore it will tip the balances slightly (if only slightly) back towards the local brick and mortar stores, thus raising gains through income taxes. Also it will make your state more attractive to internet retail stores to set up their distribution centers and such there.