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."

Comments

In other words

[jhoegl]

Collecting taxes for multiple states will require that we spend money on employing people to review, understand, program, and monitor these activities.

Re:In other words

[Fjandr]

this isn't an interstate transaction

That's some pretty specious logic.

Are you going to claim that sending an envelope of money to someone in another state is not an interstate transaction? If it is one, then sending a digital representation of money to someone in another state is functionally no different. If it is not one, I'd like to propose that your Kool-Aid be listed as a Schedule II drug.

Re:In other words

[flaming error]

> this isn't an interstate transaction
Well, I guess I'll agree with you as long as the item was warehoused at, purchased within, and shipped to the same state, and at no time during the transaction did any of the http packets or funds cross state lines.

Otherwise, it's interstate commerce.

Re:In other words

[Matheus]

This isn't Amazon twisting anything. The precedent has been established for eons back to mail order catalogs (and probably before). When you order from a company residing in a different state they are not obligated to collect the taxes from you to pay *your state for the purchase. *You are actually obligated to report such purchases and make the tax payments yourself. This is highly unenforceable (and many people have no idea they have to do so) so this ends up being a vast sea of tax evasion which the states are always trying to recoup as much of as they can.

Yes, it would be a pain for Amazon to figure out every state's tax laws and have their systems properly calculate, charge and then pay in the tax payments BUT that's not the point. They are in no way required to do so by the only entity with authority over interstate commerce (The Federal Government) and they have no incentive to do so given the costs and liabilities they would incur. SO we who don't live in states where Amazon has a significant presence get to evade taxes and procure products significantly cheaper than those who live in Amazon encumbered states, the states get to whine about their lost tax revenue, and the federal government gets to stay out of the fight until the states try to usurp their constitutionally protected powers.

The only thing that has changed between Ye Olde Sears Catalog and mighty Amazon is the scale and ease at which money is slipping away from the state's grasp AND current budget shortfalls causing states to look anywhere they can for that money.

Re:In other words

[Local ID10T]

This isn't restricting interstate commerce - it's just requiring companies that sell to states they are not located in to collect the sales/use tax for those states. It's adding requirements to collect taxes but not saying they can't sell to other states. If they don't collect the taxes the States will have to go after the companies and not the Federal government.

First, taxation is in fact a restriction of trade. Indeed it is one of the primary restrictions of trade exercised by governments.

Second, requiring a company to collect taxes in a state in which it has no physical presence could be construed as taxation without representation, an issue which historically speaking is unpopular in the USA - I think we fought a big war over it at one time... Which is why the interstate commerce clause exists in the first place. According to the Supreme Court (Gonzales v. Raich, 2005) "...For the first century of our history, the primary use of the [Interstate Commerce] Clause was to preclude the kind of discriminatory state legislation that had once been permissible."

Re:In other words

[Anthony Mouse]

taxation without representation

That's not the half of it. The real problem is protectionism. A state wants people to buy locally because it creates local jobs, etc., and an easy way to do that is to create a tariff on goods imported into the state. Of course, that's economically very inefficient because it's a waste of resources for every company to build a separate facility in every state just so they can avoid the tariffs, so we give regulation of interstate commerce to Feds who presumably won't do that.

So what's the problem with sales tax on interstate transactions? The problem is that the state can create raise the sales tax and then give the money to local businesses as subsidies, which has the exact same result as a tariff because the local companies can reduce their prices by the amount of the subsidy (i.e. the amount of the tax) and thereby have that much lower prices than out of state companies. In fact, basically any sales tax collected has essentially this result, because all else equal a higher sales tax will mean either more services/subsidies or lower non-sales taxes, which are both effectively subsidies to local businesses and individuals.

In other words, collecting sales tax on interstate transactions effectively create state-level import tariffs because out of state companies have to collect the tax but they don't receive the benefits from it. It's taxation without representation and protectionism.

Why not just raise taxes on the rich?

[rsilvergun]

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.

Re:Why not just raise taxes on the rich?

[Attila Dimedici]

You do realize that if you confiscated all of the money earned by everyone who earns more than $250,000 a year it would not even cover the Federal deficit for one year? What are you going to do the second year?

GST

[DiSKiLLeR]

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...

Re:Finish your sentence!

[Anonymous Coward]

Better 1.4T than 2.2T. Drop your various overseas wars and you'll find a pile more cash in the kitty.

Re:Finish your sentence!

[Nethemas the Great]

How about close the corporate tax holes that permit the bean counter to shift profits overseas to avoid U.S. taxation.

Re:Finish your sentence!

[airfoobar]

If you invested even a tenth your "defense" budget over the last 5 years into solar enegry that wouldn't be a problem. Got to keep the oil and arms companies happy, though!

Re:Hmmm...

[cpu6502]

This affects more than just Amazon. It also affects anybody who sells used goods on Ebay or Craigslist or the newspaper. You would be expected to collect and mail tax to states ~2000 miles away.

That is taxation by a government where you have No voice. It is immoral and unconscionable.

So the question you should be asking: Do I sell across state lines? Am I prepared to file upto 50 different tax returns to 50 different governments? And what if I make a mistake? Will I be extradited hundreds or even thousands of miles from home to stand trial for Sales tax evasion or penalties?

This also seems like a great way for states to abuse foreign citizens. Example: California residents pay 6% sales tax, while non-residents have to pay 16% sales tax. (Or something similar.) And without a voice in their legislature, there's not a darn thing you can do about it.

Re:The Constitutional Right to Competitive Advanta

[PhreakOfTime]

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?

Re:Finish your sentence!

[mbkennel]

The poster might be aware of this, but when Dick Cheney said "Reagan proved deficits don't matter", he meant "Reagan proved deficits don't matter" when it comes to re-electing Republicans.

Cheney didn't say they didn't matter economically and that was the point. GWB's first Treasury Secretary was shocked at Cheney's psychopathic immorality---Cheney didn't give a crap about actual general economic welfare or the future, just more power for his kind of people in order to lower taxes on them.

House Republicans are deficit-cutting dragons until the nanosecond their budget actually can get passed. Then it flips to spend spend spend (on old people & military, no brown people), and what they really want, yet more tax cuts for the rich.

Re:Bezos needs to grow up

[scamper_22]

what an odd sense of morals you have.

Amazon is a business which gets all its money voluntarily providing a useful service for everyone.

Meanwhile the police departments profits by sending young people to jail for smoking a plant. Public sector workers are a monopoly operation and have the state back pensions the rest of the workers in the state don't get access to.

I'm sorry, Amazon is 100% more moral than any board of education, police department of fire fighting service.

I honestly don't know many people who think the 'public sector' is this honorable public service anymore. It's a gang of self-interested mafia members.

And given the choice between a mafia and a business that voluntarily provides services... I choose the lesser of two evils... business.

If the rich have all the money....

[RobinEggs]

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.