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Slate: Amazon's Tax Stance Unfair and Unethical
theodp writes "We've talked before about Amazon's reluctance to collect sales tax, with Jeff Bezos going so far as to say it's unconstitutional. So it's not too surprising to see Amazon support a California referendum to repeal sales tax for online retailers. Slate's Farhad Manjoo loves buying from Amazon and would hate to pay higher prices, but says the e-tailer 'has no intellectually sound arguments against collecting taxes from residents — by all ethical and civic standards, its position is unsound.'"
Damn those federal rights over interstate commerce.
He should pay the use tax and be done with it, like a law abiding citizen
In America at least, the entire tax system is broken. To continue to support it in its current incarnation is -- by al ethical and civic standards, an unsound position. Hey Jeff, let's start with the premise that the entire tax system needs a complete overhaul and move forward from there.
Life is not for the lazy.
Someone please tell me how a corporation based in Washington State and legally incorporated in Delaware suddenly becomes a tax collector for states in which it does not have a physical presence? I can see being held liable for Delaware and Washington State, but until someone amends the tax codes of the remaining 48 states and other U.S. territories, I think it should remain that we don't pay sales tax on out-of-state purchases. I don't live in Ohio and I don't expect to pay Ohio state sales tax on a purchase I made over the Internet, nor do I expect the state of Michigan to tax my purchase from a company outside of Michigan.
Unless you disagree in which case it is intellectually sound (from the standpoint of the person disagreeing)
Winning a stupid popularity contest did not give people the moral right to take the money of other people, even for allegedly good causes. Taxation is simply theft. Apparently this is lost on the people of Slate, however, if they feel that "by all ethical and civic standards, Amazon's position is unsound." They are dismissing my standard of ethics out of hand, unconsidered, unrefuted, and I feel that the burden of proof is on them to prove that taxation is ethical in the first place. My ethical position may be a minority position, but a majority is not always correct, and I have yet to see a justification for taxation that does not amount to "the end justifies the means," which is not even close to ethical.
Secession is the right of all sentient beings.
Amazon won't pay taxes, they'll just collect them from you and me. WE will be the ones paying those taxes...
God is good all the time! -K
This Slate article has been brought to you by Best Buy, Target, Walmart, etc.
So Sears Roebuck owes the states 70 years or so of back taxes?
...but states are already collecting taxes on etailer sales. They pay those taxes on transportation costs. These places also generate jobs. Those people buy things which also allow for taxation.
States are just pissed that their double dipping means they might actually have to be good at their job to remain in office because balancing a budget becomes more important. Whereas the traditional school of thought is you're elected to funnel state and federal dollars to your buddies - or to declare eminent domain for an illegal land grab which is then promptly gifted to your buddies. And if you can't distract people with the slush funds lying around, how are they supposed to get away with crime as usual?
I mean, no crime, forced to actually do your job within a reasonable budget? What is this world coming to?
The problem is that sales taxes are a patchwork nightmare. Not only do different states have different rates, different collection mechanisms, and different auditing requirements, so do counties and municipalities. Just doing sales taxes for a small company that does business in 3 or 4 states is a nightmare; for a national company, it would be almost impossible. Then if you don't collect the right amount of tax, when the offended entity gets around to auditing you they hand you a bill for the tax on every transaction you've ever done since their last audit. I can understand why Bezos is so adamant about this; it's not about civic duty, but about practical possibility. If the tax was flat across the country and there was a single unified mechanism for remitting it, I doubt he would care so much.
Brackets contain world's first nanosig, highly magnified:[.]
The government should collect taxes, not amazon. They need to implement + maintain tax code. If they are required to collect the taxes, they should be credited full costs for doing so (licensing, labor etc).
Beyond this requirement, there's the question of why a non-local business should collect local taxes when they don't even exist in that state. The taxes paid by Fedex, UPS etc cover the use of the public services involved.
Every state, many counties, cities, &c., have different tax rules all of which online retailers are to manage and process? Add to this the fact that the myriad tax laws can change. Who is in charge of notifying the online retailer / ensuring compliance when a municipality changes the sales tax law? Whether some one can make an "ethical" argument for paying sales tax to a locality in which there is no physical presence aside, the attempt to shift the burden of implementing tax collection for a large set of arbitrary laws across the nation is absurd.
Whilst the Federal government may often be accused of overreaching the powers as defined by the constitution, this is not one of those times. Having many different forms of sales tax made sense when 99% of sales was brick and mortar but it's pretty much unworkable now. And the argument that congress won't agree to it isn't an excuse, if Europe can do it for VAT then the USA can do it for Sales Tax*. Besides I'm pretty sure if someone like Walmart threw their weight behind it with a few choice campaign contributions you could get it through. * Whilst VAT isn't a sales tax, it is a similar idea.
It's ridiculous to say that online retailers shouldn't have to collect taxes in states in which they have a presence. Sorry Amazon, if that's what you're fighting for you're going to lose as those terms are spelled out in the Constitution and by federal Congressional powers. States have no ability to repeal such statutes.
What states CAN do, and what has been the crux of the issue (I think), is in redefining what constitutes a "presence". And this is where things get very grey and murky. Trying to get affiliates declassified as a "presence" certainly isn't unconstitutional. It's constitutionally-questionable to consider them as a presence to begin with. Traditionally a presence required just that -- a physical presence in the state -- a warehouse, and office, a distribution center, etc; NOT just some kind of affiliation with someone else doing business from the state in question.
I suspect this issue is going to wind up in SCOTUS's hands. Typically one could guarantee the corporate entity would win considering how deep SCOTUS is in Corporate America's pockets, but this issue has corporate giants on both sides of the battle so there is no way of predicting which way it'll go.
I'm baffled by morons, like this. The obligation is that the citizen of a state pay their taxes owed to that state. If you choose not to have your employer collect your income tax, then you are obligated to pay that tax at the end of the year. If you made purchases that should have been subject to sales tax, then you are obligated to pay that tax at the end of the year, when you settle up.
I fail to see where it's the responsibility of any business (especially outside of the state) to do that work. And if they're supposed to be obligated to collect sales tax for every state, then why shouldn't they be responsible to do the same for every other country on the planet, too?
So many people eager to jump on the bandwagon of disingenuous brick and mortar chains who can't compete and just want to hobble the competition in any way they possibly can, with no regard for the principal.
Plus, aren't we a little tired of the incessant taxation? My income is taxed when it comes in. It's taxed when it goes out. And then the guy who receives it has to pay income tax on the same money that I just payed income and sales tax on. It never fucking ends.
How much do you want to bet the same guy advocating this doesn't pay a use tax on items he bought out of state while on vacation, once he crosses the border back into his own state?
Talk to the manager of a grocery store to see what they think about sales tax rules. It is a heinous burden to force that on a single store located in a single locale. Now multiply that by the number of cities and counties in the US. There is no way any company could ever comply with that in any reasonable manner.
-- Abraham Lincoln, October 15, 1858 Debate at Alton
Here's what California has done:
They changed the definition of having a location in California such that if you have a 1099 contractor doing advertising for you, you have a location in California, and therefore have to collect sales tax.
This is unconstitutional and irrational at the same time. If I hire an ad agency in your state, that does not mean I have moved there. It's no different than hiring an accountant, lawyer, or for that matter, a shipping company with a location in your state to define location (nexus). There's a reason why our constitution gives sole power to regulate and levy duties (tax) interstate commerce in a *uniform way*. This prohibition is to prevent trade wars between the states and to prevent large states from using taxation to force businesses to relocate there.
OK, so what about the poor, local businesses being put under by ______________.com?
Well, if you are a small local business, and sell mail order, you don't have to collect sales tax for shipments to anywhere other than your home state. That gives you an advantage in 49 states.
-- $G
Taxation is ethical? Always viewed it as institutional theft.
Sales tax is a regressive tax -- it hurts the poor the most, and is barely a burden on anyone beyond middle class. In addition, sales tax hurts local businesses, who have to compete not only on direct prices with the likes of Amazon, but then have to charge you an extra 5-10% as well. Instead, states should make up for lost sales tax with increased income tax. You'll get more consistent tax revenue, a healthier business community, and the added bonus of being able to know exactly how much you have to pay for stuff at the store before checkout without using a calculator.
Why don't we just replace all state sales taxes with one federal sales tax?
First, I'd define where an e-retailer was located. This could be where their web server is located, where their goods are shipped from, where their CEO has his office or most probably the state where they are incorporated in. They would be responsible for the collection of sales tax to THAT location for certain as part of their business license under their incorportation papers. Any state that wants to collect sales taxes from this e-retailer for sales made in their state would have to sign a contract with that e-retailer, and the state would have to pay the e-retailer for the cost of collecting the taxes. Only the federal government, or the state government of the e-retailers home state have the power to collect taxes from the e-retailer. Other states THINK or WISH they have this power, too bad you don't (at least not until the US Supreme court says otherwise).
If anyone in the state legislatures or Congress wanted to do it the right way. What you'd do is set up a system with these features:
1. Each state would be allowed to set one rate for the entire state.
2. Each state would publish its rate with the IRS.
3. The IRS would provide a simple web service for looking up compliance information, including rate and mailing addresses for each state's tax office.
4. The federal government would indemnify all businesses who comply with the IRS's published information from any civil or criminal charges in the event a state failed to keep its IRS records accurate.
5. Any state fails to keep its compliance records accurate with the IRS would be barred for 90 days from compliance coverage (the federal government would effectively declare that businesses could legally commit tax evasion if they are not based in the state).
Bring legal standards or STFU. "Ethical" and "civic" standards are subjective. That's one reason LAWS were written.
All the Slate statement boils down to is "we haet Amazon, herp derp".
"This post is an artistic work of fiction and falsehood. Only a fool would take anything posted here as fact."
Amazon "imports" DVDs from the tax haven island of Jersey to its UK customers so it can dodge VAT and be cheaper than bricks and mortar shops in Britain.
It didn't occur to me until I read about this ongoing saga that this is a worldwide policy.
They see sales tax as a rule that does not apply to them. Anywhere
Bang on. A single federal tax is the way to go. Unfortunately, with the current Obama-Republican-Tea Party fight in Congress, a federal tax is unlikely to happen.
A federal tax would go a long way to fixing the deficit however.
Leave it to Slate to fall to the assumption that taxes are a normal, inescapable part of life.
I want to delete my account but Slashdot doesn't allow it.
I am always floored how intelligent educated people will argue for something as ridiculous as people being under-taxed. There is no way a person can really believe that it would be more fair if more taxes are collected simply on the fantasy that if etailers are punished somehow brick retailer will get more customers? Do people really forget that any activity that is punished with more taxes will reduce. On the other side, brick retailers will not see any increase in business from taxing etailers unless their own taxes are reduced. The belief that fairness is that all parties get punished equally is the fundamental flaw in liberal ideology. I hope Amazon has the balls to fight this and them tell the California Government to F- themselves as they sell their products only to the other 49 states if they were loose.
Taxing the purchaser is the way it works for mail order. You make the purchase and then pay the sales tax where you live. Of course, can anyone here honestly say that after they ordered anything on-line or by regular snail mail they paid the applicable local sales or provincial tax? I'm not even sure who you'd send the money to, but I'll bet there's a form somewhere that almost nobody ever uses.
Anyway, all states and provinces are probably being consistently shafted when it comes to residents paying sales tax for out-of-jurisdiction purchases delivered to a resident. It also isn't exactly fair for retailers that are inside the local jurisdiction that their product gets local taxes applied, but outside purchases don't. It's a situation that discourages local purchasing. The simple solution is to tax at the point of sale regardless of where it is going, like they do in Europe, and have purchasers claim the tax back if that tax was not applicable to them. That approach has its downsides too, but would put local and out-of-jurisdiction retailers on the same footing.
I completely understand why companies like Amazon would oppose this, given that it gives them a significant price advantage over local retailers if they don't have to apply sales tax, but why should they benefit from that obviously unfair situation? What they're really asking for is a sales tax exemption for product sent out-of-state. Other than long-standing tradition, what are the reasons should they get that versus ordinary retailers selling to people in the state who do have to collect the tax?
Taxation is simply theft.
Taxation without representation is theft is the way that particular meme goes, IIRC.
... it's one of convenience.
When you, as a consumer, buy an item out of state, receive a gift, or win money from gambling - or a slew of other sources - you're expected to report your winnings to the state so they can tax it. The problem is that people don't. They either don't know, don't care, or don't worry about residental-level tax evasion being enforced. So technically the mechanisms for taxes already covers this, but it would take each state a lot of effort to track down each evader and retrieve their monies due (though one could argue that, along with fines and the jobs this would create, it could be a good thing for the state). So, basically it's really tough for them, since they wrote laws which are hard to enforce.
That's the issue. It's not convenient for the state to collect tax money.
So now they're attempting to change the laws so it's easy - they make the online retailers responsible for collecting money on their behalf and it's fine. Then they have one place to go to collect, instead of hundreds of thousands that have to be litigated. They're attempting to make online retailers - like Amazon - bear the burden that they themselves do not wish to shoulder (granted, it's easier for Amazon, but by no mean effortless). They're stretching the interpretation of existing laws to claim that in-state third parties Amazon has a business relationship represent a direct presence by Amazon, and thus they must follow the state laws for brick and mortar vendors.
If you ~had~ to bring up ethics, you should probably look at the state lawmakers. They're acting like the stereotypical royal taxmen: they see you have money, and they will make up any excuse they can to liberate it from you. Moreso now, due to budget/economy constraints they have to work under.
Did this guy just brag publicly about committing tax evasion?
I only repeat this every single time the subject comes up, but no one ever seems catch on. I repeat...
Since online retailers must SHIP product they are at a disadvantage with brick-and-mortar shops. Moreover, requiring sales tax collection for every state of every online retailer would create undue burden on MANY THOUSANDS of small business sellers and drive them out of business.
If taxes must be collected on online retail, there is only one sensible place to lay the burden -- on shipping. The shipping companies are already well equipped to handle per-state pricing structures and already have the computer infrastructure to easily add to a new line item.
:T:R:A:N:S:
Sidestepping for a moment the entire issue of the ethics of taxation, etc...
Early on, I supported the idea of keeping internet purchases tax-free, as an incentive to let things grow. In a similar vein, I support the idea of making goods manufactured in outer space tax-free. But the "need for incentive" time is long past. In fact, if anything the brick-and-mortar stores are now in serious trouble and the sales tax increases their disadvantage. I won't sit here and say that a sales tax on internet purchases the right, ethical, and Ayn Rand approved way of doing this, but it's the mechanism we've got.
It was Oliver Wendell Holmes Jr., a justice of the US Supreme Court, who once stated that "taxes are the price we pay to live in a civil society."
In recent years, in a rather brutish way we've begun tugging at the threads that weave our civil society together. Is everything optimal? Certainly not. Is there waste? Certainly. I won't argue with either of those points. I argue with the rather careless tugging at the threads, and the inattention to what it's doing to the fabric of society, the seeming attitude that, "Keeping MY money is the most important thing." Once things start falling apart - and they are falling apart - we don't know where they will stop. It's easy to say, "All we need are the basics!" but beyond not everyone agreeing on what those basics are, we may not understand the underlying web of dependence on even those things we agree are basic. OK, we need firetrucks, but without roads and fire hydrants what good are they?
Sometimes I think the US is the only nation actively aspiring and working to achieve thrid-world status.
The living have better things to do than to continue hating the dead.
That'd set the right-wing off on a rampage!
What level would the FST (Federal Sales Tax) be set at? 5%? 10%? 20%?
And who would benefit? Would it all go to the Federal Government, or would it be spread amongst the states on a per-capita basis, ot a "sales volume" basis, or what?
Just have a peek at what European VAT is like.....
Who says he isn't? When my company buys out of state, we pay our use tax or VAT, whichever the case may be. My company doesn't care either way. We pay, because that's the law. You are required to pay if this is the law in your state. This isn't optional, it's illegal if you don't. All this says is that the company is required to collect the money upon sale, not that you are no longer allowed to not pay. You were never allowed to not pay.
Now, if people wanna vote away the requirement from the tax law of their state, that's another matter. Right now, it is law in most states.
I8-D
Big companies pull this shit with their personal taxes all the time. So a company is finally willing to share a tax hole with it's consumers, and suddenly every politician gets their panties in a bunch.
What do I know, I'm just an idiot, right?
Our governments are all far too powerful, far outside of the Constitutional limits.
The Constitution has failed to restrain the government, it does need some updating to remove positive feedback loops :
The government may not borrow money.
No one may vote who takes any money, directly or indirectly, from government at any level.
Lawyers may not become members of any legislature, nor judges in any court.
Any individual whose civil rights are being violated by any representative or employee of government may treat that violation as a threat of death.
(This is elementary QA : catch problems at their source. 'Threat of death' means you are entitled to pull your gun and kill the bastard, whereupon
the case goes through a normal judicial process. If it goes to trial, you need one person on the jury whose interpretation of the Constitution agrees with yours.
A happy side-effect of this provision is that young radicals contribute to system stability instead of the reverse.)
One thing I've always wondered is why California needs so much money to operate.
Here in NH, we've got no sales tax and no income tax. Our overall tax burden is among the lowest in the US (sometimes *the* lowest, depending on the year), so yeah - our property taxes are high but not high enough to make up the difference.
Despite this dearth of income, we manage to keep the roads plowed, the schools funded, and the streetlights burning.
So what part of the economic model is different for California? Do they have more road per person to maintain? Are there more criminals per person so that they need more jails? Do they have social services we're missing (universal healthcare)?
Are coastlines more expensive than inland borders?
There's a lot of economists (student and hobby) here on Slashdot. I just don't see the difference in models.
What am I missing?
One of the issues with forcing a company like Amazon to collect sales tax in all 50 states is that states have weird sales tax laws. For example, in Iowa the sales tax is different depending on the county. So a customer who orders a part in one county has to have X amount of sales tax collected from him. A customer who lives in another county, might have a different. This is hard enough to do in Iowa, but doing it in all 50 states, plus maintaining these tax tables (I am assuming every state is different in regards to taxing shipping costs, etc). I am not against taxes, but the more hurdles we put in front of commerce, the more we will hurt entrepreneurship.
Dear Slate, by which ethical standard is forcing peaceful merchants to help extort money from unwilling people to fund the murder of brown people acceptable? Amazon's refusal to collect sales tax may be it's calculated best interest, but it is also, in a way, heroic.
That Farhad Manjoo is a clueless hack who seems to have only discovered internet faxing within the last six months, and then writes a lame article declaring the death of the fax machine.
While I have no idea how, VAT is effectively collected whenever you buy something in another EU country, and exactly at the rate of the country the buyer is residing in.
I don't see why the USA couldn't do what the EU can do with ease.
-- Abraham Lincoln, signer of the Revenue Act (first U.S. federal income tax), August 5, 1861
Amazon wants you to cheat on your taxes. It wants to help you not pay the use tax.
If the real problem for Amazon is computing the tax rate for each purchase, it could instead agreed to turn over to the Board of Equalization a list of all purchases shipped into California. Then the Board of Equalization could coordinate with the Franchise Tax Board to see if you paid the use tax, or the Board of Equalization could send you a bill for your use tax. In this way, Amazon would not be involved in computing or collecting the correct tax due.
Which would you rather: have Amazon collect the tax due or have the Board of Equalization know about every one of your purchases?
The tax is regressive in that poor people pay a higher percentage of their income in sales tax than rich people do.
If I used a sig over again, would anyone notice?
Government is force. For wise laws and unwise laws alike, they are all enforced by an implementation of "might makes right". ... This is carried out by men with guns and other weapons, typically known as either police or agents.
The government is an establishment of the will of the people. Police and agents are people entrusted with enforcing the established will of the people. As Locke talked about in the social contract, we surrender certain rights in the creation of a government in order for the government to protect and preserve the rest.
Do you not like what the government does? Then elect the candidates you favor to change government. Or run for office yourself. Until then, follow the law. As Washington said in his Farewell Address, "The very idea of the power and the right of the people to establish government presupposes the duty of every individual to obey the established government."
And another line of yours also does not sit well with me. At least you can refuse to ever allow Amazon to affect your life. You can simply not do business with them. When Amazon refuses to pay taxes on its business operations, it does affect your life. Amazon ships its products to you using couriers. They use federal, state, and local road systems. All that package weight slowly wears away on the roads. When they don't pay taxes, they don't pay to help fix the potholes you drive over every day. And that's just the beginning. When they don't pay taxes, they don't pay for the police force that protects their private property from vandalism & theft. When they don't pay taxes, they don't pay for the fire department to help put out fires on their private property. When they don't pay taxes, they aren't paying for the education and civilization of their work force that they depend on to be educated and civil. And so on, and so on, and so on. And when they don't pay their fair share, guess who has to pay for them? We all do. We are all affected by Amazon not paying the taxes necessary to support the public infrastructure it depends on to do business.
ONLY if Amazon paid sales tax would your statement be true. Because then, only those who did business with Amazon would cover their costs of business, rather than everyone throughout the country.
A whopping 3-5% tax to pay for the Civil War. The tax was repealed ten years later after the war was paid for.
news at fucking 11
I hope Amazon holds this ground. Sales tax is a terrible tax. It's extremely regressive and deserves to be abolished entirely. If local retailers feel they're unfair, they should push to have them repealed statewide.
If they have to, Amazon should relocate to one of the two states that have no sales tax, and declare that the sales happen there.
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Be clear that our current economic problems are all due to Federal attempts to manage the economy. "Pass a law, make the world a better place" doesn't work in complex systems. The cumulative effect of all of these laws and taxes has been to drive jobs and businesses out of the country.
Amazon's complaint is valid, however so is the state's stance on revenue lost. It needs to be centralized, and the CC companies seem the likely target to tally up what State taxes are owed. CC companies could attain a list of taxes due when they receive the transaction, if it's been paid already, and at years end give the card holder a notice of what is owed. I'm not saying I want to pay the tax but, why should a company that already has many advantages, also have the edge over brick and mortar when it comes to taxes.
www.moonnext.com
When I had a very, very small business I had to collect sales tax. But I got to keep a percentage when I paid the state. So there was a built-in process for reimbursing me for my effort in collecting, reporting and paying the state.
So what's the problem? Amazon should be perfectly capable of changing their checkout to charge sales tax for the delivery location. It's not like other online retailers don't do it. And if other states work like mine they'll actually make a little more money out of the deal.
Here's the suggestion part. Since local sales tax is a rather complicated thing to track (different tax rates per city, thank you very much?) why not just charge a flat 2% across the board on ALL non-physical location sales. Mail order or internet, 2%. Then pay the states. I seem to remember some states actually not wanting an internet sales tax. Fine. The retailer gets to keep the money for those states. Simple.
And one more note. For those sales where you haven't paid state sales tax you're generally supposed to report it on your tax return and pay it then. Hardly anyone does but if you look there's a line for it.
I find it absolutely hilarious when people debate what the 'framers' had in mind when discussing things they couldn't have wrapped their heads around even if they'd had it explained to them. Corporations in their current form didn't exist until the last century, and the idea of a nation-spanning business would have blown their minds. And on top of that, we're talking about a nation-spanning business that doesn't really have 'real world' presence in the traditional sense.
So given all that, why can anyone expect to take something written 230+ years ago and apply it to this kind of entity? Its like to trying to fit Queen-size bed spread on a monster truck. They're just not compatible. I know taxes are a touchy subject for you guys, but come on. I'm Canadian; despite our differences I think of Americans as family, but like any family member you have quirks (lord knows we have ours). Taxes is one of your hot button issues, even though you guys really pay almost none compared to almost everyone else in the Western world. I get it, taxes are bad. I don't like them either. I get that you don't want them to get out of control, that's cool.
But its time to be realistic. Let's say everyone goes the Amazon route; everything is online. No taxes. Yes, it'd be great, things would be cheaper. But sales tax isn't there because the government are assholes. It's there to fund the things you expect the government to provide. I'm sure there'll be some Libertarian along shortly to tell me that the government shouldn't provide anything, but for the more realistic people you've got to be able to see that if you don't collect sales tax, they'll get it somewhere else.
It shouldn't matter if figuring out what tax to collect is a pain in the ass, its doable. We do it here. In Canada, you pay based on the customer, not based on where the retailers has arbitrarily decided to put his head office. That's absolutely feasible for Amazon. And it seems pretty fair as well.
Wood Shavings!
- Godai
California seems to love shooting itself in the foot.
By passing this law they will collect exactly zero new sales tax from Amazon but will lose all the income taxes from Amazon affiliates. What a bunch of morons!
If you live in California and buy internet or mail order goods for which sales tax is not deducted - you owe the state a "use" tax on the goods. It's right there on your state tax return. California doesn't trust its citizens to report and pay it, so they want an out of state company to collect it for them. Amazon rightly said - no way.
[Insert pithy quote here]
Consider this - New Hampshire has no sales tax and Massachusetts has a 5% sales tax. Is it any wonder that residents of Mass living close to the border will happily travel a few minutes north to save some cash - especially on pricier appliances. But I never heard of Mass trying to go after the (lost) revenue from those consumer purchases (oh except for the auto purchases where the DMV will nail you for the $$).
Now is this really different just because a consumer makes the out-of-state purchase electronically? I don't think so - I think it differs only in that it can be tracked and managed. I certainly don't believe that the effort,costs and damage of trying to collect this money is worth the revenue. And finally, the important points are
Taxes equal slavery now?
Here's a clue. You are a free man in a free country. You have no shackles on your ankles, and there is no one whipping you for talking back at them while you toil all day to make them rich and only get a shack and some gruel in exchange. You want to live in a country with no taxes? You are free to get on a plane right now and fly to Somalia. There you will have no tax burden, no security, no fire department, no police department, no federal health inspectors keeping your food supply safe, no EPA making sure that your house isn't built on depleted uranium, and that your drinking water is safe, no building inspectors to make certain that your house or your office isn't a firetrap, or conforms to earthquake safety regs.
You pay less in taxes than citizens 98% of developed nations. The tax burden today is the lowest it has been in America for generations. Get some fucking perspective.
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Comment removed based on user account deletion
If Amazon is taxed when they buy the goods wholesale then they'd be happy to pass along the tax to recover their overhead.
Wasn't it a few months ago that the President of the United States commended the CEO of General Electric for their competitiveness? Wasn't this followed by offshoring money to avoid taxes is "How you get ahead in business"?
http://content.usatoday.com/communities/theoval/post/2011/03/obama-jobs-chief----the-ceo-of-ge----pays-no-corporate-taxes/1
This is how you get ahead in business: DONT PAY TAXES!
There is a kind of unfairness in the system in most states where use tax is submitted individually with little or no enforcement: the unfairness is that only the honest end up paying. So I think it would be good to reform the status quo in most states.
Anyway, here's my opinion on the Amazon issue as an ethicist, for what it's worth. The opinion needs to be taken with a grain of salt, since I am not a lawyer, nor do I know the details of the California situation.
There are three main kinds of reasons I can see Amazon as possibly having for not wanting to collect use tax from California residents.
1. The technical difficulties of computing use tax on a large body of goods for residents of different localities with different tax rates.
2. Constitutional principles about interstate trade and the federal system.
3. The loss of a competitive advantage over California-based retailers.
I think #1 would be a pretty serious issue for a small Internet-based business (say, a person or small company selling apps on Android Market, where developers are responsible for collecting and remitting sales taxes--a nuisance!). In fact, for a small enough Internet-based retailer, it could make the cost of doing business prohibitive. But #1 does not apply very well to an operation with as many resources as Amazon, and the CA law isn't aimed at very small businesses since they usually don't have affiliates of the relevant sort. Getting local tax rates isn't that hard. Figuring out which goods are taxable may be some work, but does not seem overly onerous.
I can see how #2 could be a real consideration. However, I doubt that dropping California affiliates would have been the right response if #2 is the consideration. On the other hand, the referendum support is.
On the other hand, #3 is not something a company has any right to take into account. The competitive advantage is primarily due to those California residents who fail to pay use tax when they buy from Amazon. If Amazon refrains from collecting the use tax in order to gain this competitive advantage, it appears that they are cooperating with people who are cheating on their taxes (California personal income tax forms have a section for use tax and are signed under penalty of perjury, so people who knowingly give incorrect numbers for the use tax appear to be committing perjury). And that does not seem to be ethically justified.
So, in summary, it doesn't seem unethical for Amazon to oppose the collection of CA taxes if their reasons for doing it are #1 and #2. But if their reasons include #3, this is ethically problematic. What their exact actual reasons are is not something I know.
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Doesn't have a sound intellectual argument? Why do they need one? What is the sound intellectual argument for requiring ANY business to collect ANY taxes on behalf of another party for the ANY government? No government has a sovereign right to your money. Paying taxes is not patriotic or moral.
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The fed has also stamped out rebellions using the army, or perhaps your unfamiliar with the Whiskey Rebellion.
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I think the solution is to to have a national sales tax. It would be set at roughly the average state sales tax rate. The federal government would be responsible to collect the tax and enforce it. It would apply to all sales where the buyer of the goods is in the US, whether online or in a brick-and-mortar establishment. At the end of the fiscal year the federal government would give half the tax collected for every sale to the state of the seller and the other half to the state of the buyer. The federal government will supply data on exactly which cities and counties the sale was made in and if it was online or not so that every state can use that information when deciding how to distribute the funds. The federal government can keep revenue from fines levied on tax evaders and the interest generated by holding the money until the end of the fiscal year. State and local governments can continue to create sales taxes that apply on top of this tax but they would continue not to apply to online sales. This idea is far less complicated than a VAT tax or than making every seller responsible for collecting different taxes from every state.
I'm glad states like CA are going after online merchants to protect brick and mortar stores. Do you all remember what happened to all of the blacksmiths and tanners during the horseless carriage craze, when people suddenly stopped buying horseshoes and saddles for no good reason???
On a serious note, I'm always amused by otherwise intelligent folks who embrace the concept of Darwinism in nature but are driven by some illogical sense of nostalgia or middle class guilt to empower people trying to make a living via outdated business models. Let's evolve, folks.
If there is a flaw in the Constitution, it is a lack of checks on the court. I honestly don't know how you could set it up differently.
The threat of impeachment doesn't count at a check?
Apparently not.
Cheers,
"What in the name of Fats Waller is that?"
"A four-foot prune."
"What am I missing"
How about the fact that many many residents of Southern NH travel to Massachusetts to earn their living because of the lack of JOBS in New Hampshire.
You would be singing a decidedly different tune about NH if it did not have the rich and prosperous state of Massachusetts as its best neighbor.
Why not look at other states that have policies like NH but DON'T live next to a rich neighbor?
Let's be clear here. In Quill Corp. v. North Dakota, 504 U.S. 298 (1992), the Supreme Court required a state to have nexus with someone to tax them. In that case, it included Quill paper's business through catalog sales into North Dakota. North Dakota could not exercise taxing authority over Quill because of the dormant commerce clause. But the Court said: "This aspect of our decision is made easier by the fact that the underlying issue is not only one that Congress may be better qualified to resolve, [n.10] but also one that Congress has the ultimate power to resolve." So there. If Congress does something, it is fixed. If not, it is not. Pretty simple, no?
There are two typical justifications for sales taxes:
* Businesses use state services, so they should collect taxes per transaction
* Customers use state services, ditto.
Use taxes have only the second reason above.
If use taxes are ethically and civically sound, the state should have no trouble enforcing them.
To a Lisp hacker, XML is S-expressions in drag.
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The US government can only force US businesses to collect taxes. If I buy the same item from China or Hong Kong as I frequently do on ebay, how will they enforce collection on international sellers? The stuff I'm buying says "Made in China" on it any way. I'm just cutting out all the middle men. Amazon will suddenly move it's operations to Canada, Mexico, China, "Amazonia", etc. and return to business as usual, except that now the US jobs are gone as well as the sales tax. Forget creating American jobs, we are actively killing existing ones.
The cost of a sales tax is not such a big thing. In truth, it is not any lack of taxation that gives Amazon any great advantage. It's the centralized nature of their operation. Also, they can offer better prices than local establishments even if you were to force an extra tax burden on them. The tax itself would likely not be as costly as the overhead required to deal with at least 1000 taxation jurisdictions if not many more.
Amazon trounces my local grocer and electronics store because it's got more and better stuff.
For a smaller retailer that can't offer the free shipping that Amazon can, shipping costs actually put them at a disadvantage relative to local vendors. Mail order catalogs of all kinds only compete because they are BETTER.
Whining about sales tax is just retarded. It's a red herring.
Being charged my local sales tax rate is not going to stop me from shopping at Amazon and ignoring my local Best Buy.
A Pirate and a Puritan look the same on a balance sheet.
"Paul Revere, shootin' his guns and ringin' his bell, doncha know!"
The history of the US is becoming a sad example of intellectual erosion on an exponential scale.
They're ideologues. You could have predicted their response to nine decimal places.
The cost of a sales tax is not such a big thing.
Here in California it's 9.75%. Yeah, you read that right. A couple places with city level additions are 10% or more. Ten fucking percent for sales tax (which is one of the most regressive types, Progressives... remember when you cared about things like that instead of just rah rah rah more more more?), and then everyone is all aghast when people flock to a tax free alternative.
Internet purchases are not tax free!! The buyer of the goods is supposed to pay use tax to their state for any items they purchased outside of the state; this even applies to people who drive to another state and bring things home with them from this other state. Why should Amazon or any other on-line or mail order retail be required to enforce state laws against its citizens?
What California needs to do is enforce the existing laws it has against its dishonest citizens that don't report their out of state (not just on-line or mail order) purchases for items that are brought in or delivered to the state they reside in. Why so people not seem to get this, the California citizens buying out of state goods and not paying their use tax are the criminals, not Amazon et al.
The states should make UPS/FedEx collect the tax fees, you can't get your package until either the taxes have been paid to the deliverer, the package has paperwork saying taxes were prepaid (i.e. collected by amazon), or the package is tax exempt.
Then try to get your damn package in 3 delivery attempts ;-)
where as an associate is earning a commission from actual sales
Oh, this is much worse than I expected, then. I admit to not having the statute in front of me, but I've read earlier that the law was going to change the nexus definition.
With nexus, a Company can be regulated, not just taxed. If I had a salesperson in CA, I'd ask him to move or look for another job rather than expose my out-of-state business to CA laws.
This could have far worse consequences for the People of CA than just Amazon Associates.
My God, it's Full of Source!
OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
A high percentage of the property taxes collected are from people from other states (like MA) who have summer homes. They do not use services throughout the year. NH also has some sort of sales tax on food, correct? And state run liquor stores... not exactly libertarian there...
Saying that New Hampshire has no sales taxes is an over-simplification. New Hampshire taxes prepared food, such as that sold by restaurants. Compared to other states, New Hampshire taxes very few sales.
It is also an over-simplification to say that New Hampshire has no income tax—the state taxes interest, dividends, and business profits. It would be more accurate to say that New Hampshire does not tax wages.
I do not know what percentage of property taxes collected are from summer properties, but I am sure it varies by town. A few years ago I surveyed the mailing addresses for property tax bills in one New Hampshire town. I don't remember the exact figures, and I didn't correct for property values, but a large fraction of the zip codes were for that same town.
I'll go ahead and pick nits. In your own argument you stated that #1 doesn't apply to Amazon and #2 doesn't justify the response. Therefore, according to your argument, their behavior is unethical regardless of whether or not we know their actual reasons.
The US gives huge subsidies to Big Oil, Big Pharma, Big Ag and a host of other businesses that should not get any government corporate welfare. The real attack on Amazon is that sales tax would be a burden of individuals. So instead of crapping on the economy even more and making things unaffordable to buy online for working US Citizens these people should be going after the huge unnecessary corporate welfare of companies like exxon and montsanto. Fox news actually received $5 billion from the US even though they made $10 billion in profits. Corporations need to pay their fair share of taxes and they aren't.
4. it is a burden to individual US Citizens and this effort should instead be refocused to get corporations to stop receiving corporate welfare.
Location based taxation makes no sense in a world where location is increasingly unimportant.
States need to invent an alternative to sales tax.
The point of sale is where the retailer is. If I buy something from a website in France I pay french taxes, levies and the vat and I'm responsible for import taxes since I'm effectively buying it there and having it shipped. If online retailers have to figure out the taxes on everyone on all the city, province, and country level it would be catastrophe.
The only reasonable answer is having a federal sales tax or making the postal services collect notices on purchases and requiring payment before final delivery. That is the reasonable and simple answer. Shipping services are a logistics service and in the position to figure tax information out. It would be a natural part of their service.
Say you make 2000$ a month, and you need to spend in a sorely needed home appliance, which costs 1000$, + sales tax of, say. 10% this amounts to 1100$. Out of your 2000$, you had to give 100$ for the tax, or 5% your income.
Now say you make 20000$ a month, the appliance costs the same, and you pay the same 100$ tax, that amounts to 0,5% your income.
If you make 200000$ a month, the 100$ tax will set you back only 0,05%...
Thats what makes it regressive, for the rich its nothing, for the poor its a sacrifice of sorely needed money.
A tax based on income, can be considered flat or "fair", and a tax on luxuries is progressive. Yes, i am aware American politicians make it so the poor suffers more, is not like they have the money to lobby for better laws anyway... (gotta save it for sales tax :P)
Artix
Your Linux, your init.
Well, according to der Fuehrer Shrub, "it's just a fucking piece of paper."
The funny thing is I just checked, and they only charge GST (Federal) and not PST (Provincial). Which is funny because we now have HST (Harmonized).
So I could see, them getting away before only charging the federal, but now that it is combined? They may be in trouble with Canada as well if anyone bothers to notice...
Open a state sales tax processing company
Charge clients 0.5-1% of total sale for tax processing
Profit!
Let me see if I've got this straight:
California residents who buy from Amazon are already subject to a use-tax on the items they purchase. California tacitly admits that it is too expensive for the state to force compliance of this tax, so they attempt to make Amazon pay the collection costs without offering Amazon any benefit in return?
That's not business; it's blackmail.
California has a spending problem, not a revenue problem. Giving them more revenue in the form of additional sales taxes simply means we'd spend more on stupid stuff. In the last year or so my town paid $400k for a Rodeo Drive sign company to put in new town attractions signs, frequently right next to or in front of perfectly legible signs that said the same thing, which were in fine condition. Just not sexy enough. They built a pedestrian overpass at an intersection that nobody uses, because its about 8 times further to go over that than just push the walk button and walk in the crosswalk. That was over a million. Despite having 33 parks in a town maybe 10 miles by 10 miles, they spent $1.2M on a park because the local residents didnt want to go 1/4 mile to a nearby park that already existed. We spent $400k on a 'roadside beautification' project that involved putting in some shrubs, bark and an irrigation system which is right in front of an open trench street drainage system thats filled with waist high weeds. Really beautiful. We need to shut off the money, not figure out ways to help the drunken sailors spend more. Similarly to how the recent law worked out (amazon drops affiliates, state loses 25,000 jobs and $124M in revenue when they all 'relocate' to Oregon and Washington), if and when they get amazon (and other stores) to start paying sales tax in california, people will simply buy less from them, causing them to burp up jobs and profits. I'm not going to drive to 6 local retail stores looking for a widget that I can find in 10 seconds on Amazon, but if I have to pay 10% more for everything then I might just decide to live without it. If amazons revenues drop, they'll have to either cut costs (there goes the good customer service) or raise prices (there goes using them as an inexpensive online source of goodies. Its the myopic view of the issue thats the problem. Our legislature is out of control and giving them more money isnt the solution. Further, they dont give a rats backside about what damage they incidentally cause to other state businesses or businesses that arent in CA.
"I think #1 would be a pretty serious issue for a small Internet-based business (say, a person or small company selling apps on Android Market, where developers are responsible for collecting and remitting sales taxes--a nuisance!). In fact, for a small enough Internet-based retailer, it could make the cost of doing business prohibitive. But #1 does not apply very well to an operation with as many resources as Amazon, and the CA law isn't aimed at very small businesses since they usually don't have affiliates of the relevant sort. Getting local tax rates isn't that hard. Figuring out which goods are taxable may be some work, but does not seem overly onerous."
No, that's not a valid argument. Businesses use software that can calculate all kinds of taxes automatically. Every business with even a single employee has to do very complicated calculations for payroll taxes, or just pay a company like Intuit $100/year to send them the tax tables to automatically calculate all of the taxes. Calculating taxes is generally a one-button procedure.
I don't respond to AC's.
To Slate's Farhad Manjoo (and anyone else who is interested): Please feel free to contribute 100% of your income to the government of your choice.
Circle the wagons and fire inward. Entropy increases without bounds.
Sales taxes are supposed to be paid by consumers to the states. If consumers aren't paying the taxes they're supposed to be paying, then it's the state governments' job to enforce their own laws and collect the taxes. The states have no business demanding that Amazon act as their tax collectors.
I write sci-fi for metalheads
Awesome! Let's have a war tax then, enough to pay for any conflict we get ourselves into. For extra fairness, only make people pay it if they want to go to war. I would stand behind that.
No they are telling Amazon to collect and forward the taxes paid by California residents.
I pity you if you really believe that. Think we could ever get something like the Bill of Rights out of today's political climate, let alone something better? Say what you want about the Founding Fathers. They were imperfect men living in imperfect times. Today's politics are chipping away at what we already have. A new constitution would all sorts of exemptions for things like "the children", the war on terror, etc and just be a patent leather boot stepping on people's faces over and over again.
When a company is incorporated in Delaware, with national headquarters in Nebraska, using webservers housed in datacenters based in Virginia, Texas, and California, and they sell a product to a customer with a billing address in Nevada and a shipping address in Arizona, they drop ship the product from a warehouse in Colorado.
Which federal, state, county, municipal, and special district taxes apply to the sale? What are the tax rates of each applicable jurisdiction? Anyone? How did the recent legislative sessions in each of those jurisdictions affect each tax rate? How are the taxes remitted to each of those jurisdictions?
The product in question is produced in China then transported around the world for an amazingly low $4.99. Then it costs the seller $29 to figure out how much tax to charge. In the end, the customer has to pay $65 to cover the production, shipping, tax, and tax calculation overhead, with a profit to the retailer.
"by all ethical and civic standards, its position is unsound"
Well, there is always:
"No taxation without representation"
http://en.wikipedia.org/wiki/No_taxation_without_representation
So, I don't know about Amazon's position, but there exists an ethical reason for not collecting taxes from those who cannot vote.
FreeMusicPush If you want to see more Free Music made, listen to Free
It's a deal. We'll cut US income taxes to zero and then, when there's a war, raise them to 3-5% with all the money going to fund the war effort. And sure, don't pay if you don't support the war.
It's an acceptable compromise. Good idea.
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I guess taxes weren't tyrannical enslavement by men who would be divine kings, after all.
Ethical and unfair? Neither are legal, political or rational arguments.
Unless the federal government introduces a law which impels companies to collect the taxes of other jurisdictions then Amazon is behaving perfectly correctly and rationally. If I as a Canadian company were selling to Californians via the internet, should I be expected to collect and remit California sales taxes. No way that could happen. Why is Amazon any different? It is the responsibility of the purchaser to meet local sales tax obligations in such cases. That this is very difficult to enforce is beside the point. The principal is very clear: no jurisdiction can be impelled to collect the taxes of another. As long as the US remains a federal state thats the way it is; unless of course the federal government passes another law which "deems" internet sellers to be domiciled in every state in which it makes sales. Good luck with that on constitutional grounds, not to speak of the corporate tax implications, though it would deal with the issue.
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