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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."
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.
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
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."
Better 1.4T than 2.2T. Drop your various overseas wars and you'll find a pile more cash in the kitty.
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."
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.
Except it is unconstitutional for a state to tax or regulate interstate commerce. Imagine if California could put a tariff on Florida Orange juice coming into the state to protect California growers?
That is one of those things that is clearly forbidden in the constitution. The issue is that the internet confuses where the commerce is taking place but it is no different than catalog sales and those are also not taxed.
See my blog http://ilovecookes.blogspot.com/ for light hearted technical information.
> 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.
Bezos needs to stop bitching and just realise he's fighting an uphill losing battle he's going to inevitably lose.
That's about as intelligent as saying that you're going to die anyway so why not just lay down and die now?
Every day he can hold off on unfavorable policies is a bit richer he will be. This way of thinking is what helps the rich get richer while attitudes like yours help keep the poor getting poorer.
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.
Actually it was the result of Gibbons v. Ogden(1824).
On Tuesday May 17, @11:06AM, by DiSKiLLeR vomited:
>>>The way the US does everything at the state level... truly results in anarchy...
State-level organizations equals anarchy? No actually it results in Federalism. Ya know..... like how the European Union is setup. The US is a union of multiple governments. (Next I suppose you'll criticize the EU's multiple sales tax system?)
My AC stalker: " I personally agree with your posts most of the time, but that won't keep me from modding you troll"
How about close the corporate tax holes that permit the bean counter to shift profits overseas to avoid U.S. taxation.
Two of my imaginary friends reproduced once
It does up to a certain point. Increasing the tax rate from 0% to 5% will certainly raise more revenue. From 5% to 10% almost certainly will as well. From 85% to 90% probably won't. The tipping point is usually considered to be about 60% for total tax take from all sources.
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!
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?
Somehow I doubt progressives would object much to, say, Alabama seceding.
A strong central government is un-American, states' rights are enshrined in the constitution. That's not going to change regardless of how much sense it does or does not make.
Two of my imaginary friends reproduced once
Amazon collects tax it has actually presences in, such as Washington State.
"linux is just DOS with a UNIX like syntax" -- Galactic Dominator (944134)
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."
"You want to know how to help your kids? Leave them the fuck alone." -George Carlin
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.
I posted this for the OP, but thought I'd repost so you could read it too. Stats don't say otherwise. You're simply wrong on that. http://yro.slashdot.org/comments.pl?sid=2164084&cid=36160390
Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master.
States do have the right to collect that tax, that's what this whole discussion is about. It's about whether amazon is required to collect it for them. Pretty much every state has a use tax that people should be paying for all their untaxed items purchased from out of state. If that's not happening, you can hardly blame amazon that a whole bunch of whiners who are demanding government services aren't paying they legally required taxes that fund those services.
The US military does not have a "cold war structure", USAF, USMC, US Army were changed from 1990 through 1996 and then the Army was restructured again with the advent of the Stryker Brigade concept. The last time the US military deployed in a cold war structure for AirLand Battle was in Iraq and Kuwait in 1990-'91.
The Navy has a modified "cold war structure", mainly because ships are ships and theres not much streamlining you can do other than decrease the number of ships you have and re task some of them. Naval Aviation has been dramatically changed with the reduction of deployed aircraft models from 8 to 5.
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.
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
That is what we spend in the US EVERY YEAR on the poor, the sick, and the lazy....and what have those people contributed to the world besides crime and cranking out babies who turn into even more poor, sick, and lazy people.
Better let those fuckers die of disease and starvation, right? "Fight hunger and poverty! Eat a poor person today!"
You, sir, are an idiot.
Perhaps I'm trolling, perhaps I'm not.
If we spent on the military and in NASA what we spend on welfare and medicare in the US. We could replace every aircraft and ship in inventory with new equipment EVERY YEAR. We could build a new space station in orbit EVERY YEAR. We could build a new moon base EVERY YEAR. We could take a trip to Mars EVERY YEAR, and the sad part is we would have money left over.
True, but a few million senior citizens would be dead, partially because they spent their lives working in jobs where instead of providing a decent pension and retirement health insurance, their employer (or CEO or shareholders) got bigger yachts.
The reality is that the rich don't pay their fare share of taxes. I'm a small business owner, and if I make an extra $100, my federal taxes on that are about 43% between income and payroll. The ueber rich don't pay payroll taxes and get down to about 38% on their salaries. But the really really rich, who make millions when they sell their stock options, pay 15%. Oh, don't forget about fun things l like getting the federal government to pay 35% of your interest on your $1 million mortgage.
Even the bush tax cuts.. the average american saw their tax bill go down less than 1%. But people making millions of dollars a year saw their tax bill go down 6%.
The whole tax system is rigged in favor of the rich, and a bit for the ueber poor. Those of us in the middle are screwed.
As an aside, the worst tax for jobs in the US is the Federal Job Tax, aka Social Security and Medicare. About 40% of the US's revenue is in the job tax, and anyone can avoid paying the job tax by simply refusing to hire Americans in favor of hiring people in other countries. If we really want to fix the tax system in the US, we'd do something like no taxes on the first $30k of income, and a flat 25% income tax on everything beyond that - income, capital gains, dividends, whatever, 25%. No payroll tax, eliminating the huge tax incentive for shipping jobs overseas.
paintball
Routing is wierd. You'd have to look at the packet source and destination - looking at the path would really be unfair.
I've seen shit go from atlanta to texas and back instead of just going around the metro 'ring'
For large sets, this will be our guide even unto death, for the LORD will work for each type of data it is applied to...
If states can allow and levy taxes on Indian Casinos, why can they not levy taxes on corporations selling to or from their state?
Bzzt. Wrong. States do NOT levy taxes on tribal casinos that are operated on tribal land.
Per federal law, tribes operating gaming establishments must enter into Tribal-State Compacts. with their respective States.
Any money the State gets is per Compact negotiations ultimately derived from Federal law, and in fact these compacts are not legal until they are accepted and entered into the Federal Registry. Furthermore, the federal laws governing this entire situation specifically point out that they do NOT give the States the authority to "impose any taxes, fee, charge, or other assessment upon an Indian tribe."
Now get off my lawn, nub.
"His name was James Damore."
You might have missed Amazon canceling affiliate programs with residents of states which have attempted to enforce that rule. This is because Amazon actually doesn't have physical presence in most states without the affiliate programs.
Then again, wouldn't that make at least some credit card purchases interstate purchases.
I'm sure the transaction ends up crossing state lines at some point.
(not trying to be a $#^@, just pointing out the shades of gray)
He is NOT an idiot.
He's an asshole. An idiot just doesn't know any better.
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
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.
They get sales because people say, hey I can save 10 bucks on this just from lack of sales taxes alone!
No, Amazon gets sales because their prices are lower.
Just today, my wife bought something for our dogs from Amazon that she had been ordering from a different place on the Internet. Amazon wanted $2/unit less, and this is a consumable that we go through about 5/month. Both sites have no sales tax in our state and free shipping for the order size we would buy.
Well put.
It's a joke, son. Lighten up.
The states are wanting Amazon to pay YOUR taxes,
No, they want Amazon to COLLECT your taxes. The same as McDonalds, and Payless Shoes do when you make a purchase and they add sales tax to the bill and then cut the state a check for that amount.
No, you're simply wrong. I'm astounded at the level of flat out wrong statements in this thread. The GP described the reality accurately (at least in California). If I slip over the border to Oregon and buy goods to avoid sales tax, and then I bring them back to California I am legally required to report them and pay the sales tax I would have paid if I had purchased them in California. This isn't some new law that came up because of the internet. It is decades old. It is not unconstitutional. Most (all?) states with sales taxes have a similar rule.
What is arguably unconstitutional is for a state to require an out-of-state party to collect that tax for them (the way a retailer in the state would be required to).
Taxes only impose a deadweight loss on a transaction, or otherwise dis-incentivize it, insofar as the supply of the good is elastic. A perfectly inelastic good, such as a land, or a license to a fixed good like radio spectrum, can be taxed at an arbitrary rate and there will be no distortion of economic decisions.
So yes, taxes are a restriction on trade. And land and radio spectrum aren't perfectly inelastic. Both have a finite value. If the tax is greater than the value to the owner plus the costs of unwinding ownership, then the owner has economic incentive to get rid of the property. That implies demand isn't inelastic. As to supply, land isn't equivalent in quality and location. As demand for land increases, poorer and poorer quality land will be purposed for the demand. Similarly, if demand goes down, then the poorer quality real estate will be the first to go fallow.
What the fuck are you talking about?
DoD budget this year is $553 Billion. http://www.gpoaccess.gov/usbudget/fy12/pdf/BUDGET-2012-BUD-7.pdf
The Department of Health and Human Services, which funds both Medicare and Health and Human Services has a budget of approximately $80 Billion. http://www.gpoaccess.gov/usbudget/fy12/pdf/BUDGET-2012-BUD-11.pdf
Slavery was banned by the 13th Amendment - i.e. by amending the constitution in the prescribed manner, not by circumventing it.
And slavery was not enshrined in the constitution. It was tacitly condoned, but the document itself does not even have the word "slave" in it.
Mail order sellers have NEVER collected out of state sales taxes. North Dakota tried an end run by claiming computers and floppy disks were somehow different from catalogs and U.S. mail, but the Supreme Court disagreed.
That's why you see on some of those mail order offers a thing that says residents of xyz states must pay sales tax. The business has a physical presence in those states.
Part of the problem is the logistical nightmare. 50 different states with 50 different forms, deadlines, 50 different rates and 50 different lists of exceptions, all subject to change at the whim of each state.
There is also the slippery slope. If the states get to insist on that, how long until the counties, cities, and towns get in on the act with their several thousand different procedures and forms?
No, no tax on most (unprepared, raw?) items. Snack items and other items (I don't recall all the rules) are taxed.
Today I bought a Subway sandwich. I did not have it toasted. If it was toasted it would have been taxed (no extra money in Subway's pocket, just the states). Any hot sub is taxed as well.
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.
Fine then, we'll just have everyone pay sales taxes to the state where the warehouse is located. (Of course, this means the warehouses will be located in no-sales-tax states.)
Buying on the internet isn't all that different from getting in your car, driving to another state, going into a store there, and buying it, and then having a private shipper ship it back to your house for you. In that case, the only sales tax you pay is to the state where the store is located, not where your house is located.
Similarly, many cities have their own sales taxes. I live in Tempe, Arizona. If I get in my car and drive 2 miles (literally) to Phoenix, and buy something at a store there, I pay an additional Phoenix sales tax, which goes to Phoenix's city government, not Tempe's. Tempe doesn't get anything just because I happen to live here.
With internet shopping, the only thing that's really different is the fact that I don't have to leave my house to buy things. But again, this isn't much different from calling a store in Phoenix and ordering something to be delivered to my home. I'd pay Phoenix city sales tax in that case, not Tempe's.
Where states get this idea that they're entitled to sales tax money for transactions that don't occur within their borders I have no idea. It's just a money grab, nothing more.