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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
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.
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
It needs radical change, not complete overhaul. A complete overhaul would be disastrous. that term is just used to create an emotion response.
But what needs to be changed is so emotion entrenched that it could never happen.
The Kruger Dunning explains most post on
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.
Then you're also asking all of those states, counties, and cities to completely re-write their tax codes and even re-charter their constitutions because of differences in how they raise state revenues (some have no sales taxes, and opt for higher property or income taxes instead ... or some simply have different mixes of those things). You're talking about telling a state like Wyoming that it now must consider its revenue strategy in the same way that New York does. Which is culturally, geographically, seasonally, and otherwise crazy talk.
Don't disappoint your bird dog. Go to the range.
Exactly. The United States of America was completely built around the concept of having power concentrated from one primary location, out to the spokes of the rest of the empire. Oh wait, it wasn't.
Also, what are you going to do about the states that don't have sales tax?
Also, you're really going to hold the europe/the eurpean union up as an example of economic sanity?
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.
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.
I agree, but I think that it is worthwhile to say why instead of simply calling it "broken".
Personally, I have three main problems with the sales tax specifically. First, it is a regressive tax, which is to say that it takes a greater proportion of the income of lower-income earners than of higher income earners. That alone would be enough to convince me to abolish it and replace it with accordingly increased income taxes.
Second, it introduces significant overhead on the part of businesses that must calculate, track, and pay this tax. Then there is the matter of the government collecting and enforcing it. This time, money, and energy is simply wasted. If it were a value-added tax like they have in many European countries, then this effect would be far worse due to the increased complexity of calculation and the increased number of parties that need to collect and pay it.
Third, just as paying someone incentivizes them to do something, taxing a behavior incentivizes people to not do it. Given that part of our recent economic problems have resulted from a surplus of goods and services with not enough people buying them, eliminating the sales tax would have a (possibly small) beneficial effect.
From my perspective, all taxes are means of the government collecting money. I would prefer that we start with just the income tax and inheritance tax and think very hard about each additional tax that we add to make sure that what it adds to the system is worth the additional costs and side-effects. In the case of the sales tax, I don't see any significant benefits over the income tax and the many negative effects make it a huge negative overall. I would like to see it done away with on all levels of government.
(no sig)
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.
I'm for a "Federal Sales Tax". Simple, if I sell in a state I have a physical presence in, I must abide by the local laws where my business resides. If I sell across state boundaries, all of those sales must collect a "Federal Sales Tax". This "Federal Sales Tax" collected is then distributed to the 50 states with 50% being distributed evenly across all 50 states and the remaining 50% distributed based on a percentage of population living in that state (so ND would get a very small portion of the second half whereas California would get a very large portion of the second half, but both states would get an equal share of the first 50% of the tax).
Such a system would eliminate the burden on the buyer to be 'honest' and report their use tax (who really does this?), makes a very reasonable burden on the seller to collect a tax for sales across state lines, and all 50 states benefit from the taxes.
While I'd prefer to just say "screw all of this", eliminate all forms of taxation except sales tax, make it a flat 10%, and tax EVERY sale (from the manufacturer to the wholesaler to the retailer to the reseller), but that's just a pipe dream.
Before commenting on the Bible, please read it first
The thing is, they wouldn't replace state sales taxes with a federal sales tax/VAT. You'd get a shiny new federal sales tax, PLUS your existing state/county/local taxes. Oh, and don't forget to tax whomever the in vogue boogeyman is at the time, too.
-- 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?
Sales tax is not regressive, it is flat. The rate of tax is the same regardless of whether you are a high or low income earner. Just because there are more low income earners than high, resulting in a larger proportion of overall revenues coming from low income earners, does not make the tax regressive.
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.
Don't look now, but Amazon is also arguing that a distribution center doesn't count as a physical presence. See Nevada, and the fact that Amazon doesn't feel the need to collect taxes there despite their two large distribution centers.
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.
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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
What you fail to understand is that not all states have a sales tax. If Amazon was required by a particular state to collect sales tax on sales shipped out of that state, they would simply close any presence they have in that state and move it to a state without such requirements (quite likely one with no sales tax at all).
The truth is that all men having power ought to be mistrusted. James Madison
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
As a supporter of the Fair Tax, I completely agree, however I think there are two reasons why it won't happen:
1) Entrenched interested in the current system (Accountants, the IRS, politicians, etc) who wouldn't want to see income tax and the complicated system go away
2) The fear that people will really see how much of their money goes to taxes.
#1 prevents a national tax because people don't want to have a new tax, they want a replacement tax. It will be very hard to eliminate income tax in my opinion.
#2 is a real concern because under the current system, no one knows how much of the cost of an item goes towards taxes. If you asked me what percentage of my income went towards taxes, I couldn't tell you. Between matching taxes my employer pays, deductions that I take, taxes that are built in to the price of all the goods I by, etc, there's no way to know. A lot of people will be pissed when they see a 23% VAT (30% sales tax) on everything they buy because for the first time, people will really know that a quarter of all their money goes to taxes.
For those not familiar with the topic, the Wikipedia article is an exceptionally good read in this area: http://en.wikipedia.org/wiki/Fair_tax
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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Canada's started at 7% and is now at 5%. In Europe it can range as high as 30% (IIRC). Australia has a federal tax too, but I don't know the rate.
Curiously, the federal governments of all of those are smaller on a budget/capita basis than that of the US. Huh.
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If Amazon is taxed when they buy the goods wholesale then they'd be happy to pass along the tax to recover their overhead.
The thing is, they wouldn't replace state sales taxes with a federal sales tax/VAT. You'd get a shiny new federal sales tax, PLUS your existing state/county/local taxes.
This is where you take advantage of federal pre-emption and nuke them otherwise there'd be no point in doing it.
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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Please show me where California state taxes are paying the US military
upon the advice of my lawyer, i have no sig at this time
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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Exactly. The United States of America was completely built around the concept of having power concentrated from one primary location, out to the spokes of the rest of the empire. Oh wait, it wasn't.
Also, what are you going to do about the states that don't have sales tax?
Also, you're really going to hold the europe/the eurpean union up as an example of economic sanity?
Ok clever clogs, you've slated my answer but you've failed to tell me your solution? Because at the moment the USA is heading to a situation where legislative inactivity has meant that it's going to be down to judges to make up the law and we all know that's exactly what the founding fathers had that in mind. You know as well as I do that "use tax" is a pointless exercise, so come up with a better solution?
With regard to states that don't have a sales tax, you allow variation up to 10%. VAT in Europe runs from 15% to 25%, just run yours from 0-10%.
In terms of business regulation Europe is quite sane, though like everywhere there are some absurdities. I can set up business in one European Country and sell to anywhere in Europe. I charge VAT at the local rate, meet European wide consumer safety standards and I don't have to worry about any local business laws because there is usually a Europe-wide standard which has harmonised them. As much as Europeans knock Europe we hang together because the alternative is much less sane. Trying to do business across 27 sovereign states without a central coordinating body is expensive otherwise.
P.S. If you were referring to the Euro, you're right it's not sane but that's not Europe wide. Quite a few countries recognised that yoking a goat with a bull was a bad idea in the first place.
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EU members have passed extensive tax harmonization over the years. Rates are set by country and the details of what's taxable where and for how much has been made consistent throughout the union. No such thing has happened or is practical in the US. Every state has its own rules for what's taxed at what rate. For example, in most states you don't have to pay sales tax on food items bought at the grocery store, but in others you still have to pay sales tax on those items fully or in some states at a lower rate than you would for non-food items. In New York, you don't have to pay sales tax on clothing. North Carolina has an annual sales tax holiday where certain items like books are sales tax free for 3 days a year.
What really makes it complex though is that the rates or rules are not consistent across an entire state because local governments can also have their own taxes. Where I live in Seattle, we pay the base 6.5% Washington state sales tax plus 3% in local taxes. Some of those local taxes go to the city where the item is purchased, some to the county where the item was purchased and yet some goes to the regional transit authority spanning multiple counties. On top of that, if you're buying food and beverages in a restaurant, there's an additional 0.5% which goes to pay off debt for stadiums.
There are tens of thousands of different individual jurisdictions just like this across the country. Harmonization would mean elimination of dedicated funding sources for local governments which is just very unlikely to happen any time soon.
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Then you're also asking all of those states, counties, and cities to completely re-write their tax codes and even re-charter their constitutions because of differences in how they raise state revenues (some have no sales taxes, and opt for higher property or income taxes instead ... or some simply have different mixes of those things). You're talking about telling a state like Wyoming that it now must consider its revenue strategy in the same way that New York does. Which is culturally, geographically, seasonally, and otherwise crazy talk.
Why is it crazy talk? If a state like Wyoming is now doing massive amounts of business with a state like New York something's got to give. Those tax codes and revenue methods were decided at a time when interstate commerce was a lot less common than it is now. Back in the day it was large companies doing a small number of bulk transactions between states. Now you have literally millions of small business to consumer transactions taking place across state lines and you expect just building on the old laws to work? It's the difference between coding for a massive CPU based machine with a maximum of 6 threads executing in parallel and coding for a GPU number cruncher with thousands or even millions of threads in parallel. You have to reduce the original laws down to the ideas behind them and rebuild, it's painful but it should do you for another 100 years.
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.
I didn't say Wyoming was doing a bunch of business with New York. I'm saying that if you make this a uniform, federally-run sales tax program, states that internally raise their own revenue in very different ways will have to completely tear down and rebuild all of those mechanisms. Places that rely on property taxes will have to cut those because those people are now paying new taxes (which have to be expensivevly laundered through a new federal bureaucracy, right? wonderful). Places that rely on very low property taxes, and opt instead for high sales taxes will have to now raise property taxes or other fees on their citizens to make up for lower sales taxes forced by the feds. You do see this, right?
Don't disappoint your bird dog. Go to the range.
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No, were saying they have to make it simple if they want collect from businesses out of state. Wyoming can set its rate to whatever it wants. It can also split the tax with its local governments. It can do rebates on goods it doesn't want to tax. But it has to be simple and uniform on the business end if they want to collect from out of state. The people of Kentucky, Nevada, and New York didn't vote for Wyoming complex tax laws. They shouldn't have deal with that junk.
The law Amazon is pushing would allow states to set the rate from nothing to whatever they want. They are totally fine with looking up a single rate from a table with 50 entries. They just want something that is simple and applied evenly to all businesses.
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.
Sales tax is not regressive, it is flat. The rate of tax is the same regardless of whether you are a high or low income earner. Just because there are more low income earners than high, resulting in a larger proportion of overall revenues coming from low income earners, does not make the tax regressive.
It is regressive relative to income, since low income earners spend a greater proportion of their income on things that the sales tax applies to, therefore losing a greater proportion of their income to the tax.
(no sig)
"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.
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 $10 billion in profits. Corporations need to pay their fair share of taxes and they aren't.
4. it is a burden to individual US Citizens and this effort should instead be refocused to get corporations to stop receiving corporate welfare.
It's regressive relative to income, but flat relative to its own basis, which seems a more relevant measure.
Location based taxation makes no sense in a world where location is increasingly unimportant.
States need to invent an alternative to sales tax.
The point of sale is where the retailer is. If I buy something from a website in France I pay french taxes, levies and the vat and I'm responsible for import taxes since I'm effectively buying it there and having it shipped. If online retailers have to figure out the taxes on everyone on all the city, province, and country level it would be catastrophe.
The only reasonable answer is having a federal sales tax or making the postal services collect notices on purchases and requiring payment before final delivery. That is the reasonable and simple answer. Shipping services are a logistics service and in the position to figure tax information out. It would be a natural part of their service.
Say you make 2000$ 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.
Holy shit that would be complex. And that presumes that the federal government would actually distribute the money without strings. I presume they would also take a few percent off the top for the agency that would be added to manage the trillions of dollars of transactions.
Good luck
Is it just my observation, or are there way too many stupid people in the world?
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...
Except that's not why California is going after them. They have a serious revenue problem. Ever heard of prop 13 (assessments and taxes are essentially fixed and tax measures require a super majority) and the crash in property values? That's lead to a huge shortfall. The governor is working overtime to find ways to raise taxes that the Republican's will go along with. This is one. It's not great in my book but it's better than issuing bonds to fund current expenses which is what Schwarzenegger did not too many years ago.
Mod parent up. I'm not sure this is what we should do but it's an idea which deserves consideration. The end game to the current situation is no sales tax collected on durable goods(i.e. not gas or food) in any jurisdiction.
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.
My husband is completely paranoid about being audited, so yeah, we pay use tax. Drives me nuts.
Uh, "if it looks roughly mouse-shaped according to my infra-red sensitive pit, eat it"? --Chris Burke 09-08-10
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.
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.
please mod parent up
Either commenters don't understand Regressive tax or aren't reading that post correctly.
When a poor person buys the $1000 TV mentioned in TFA, he plans and sweats and worries for months before taking the plunge. When a slashdot reader buys that same TV, it is with two days' earnings- petty cash. But they both pay the same sales tax.
At the end of the year, the poor person has given perhaps 4% of his income for sales, gas and other regressive taxes. The tech genius pays less than 1% and invests most of his generous income in home and businesses that offer tax advantages.
The income tax was designed so that the poor might retain enough money to put food on the table while the rich could pay a higher percentage because they could afford it. It is a Progressive tax.
...omphaloskepsis often...
Sorry I wasn't implying you were saying Wyoming was doing masses of business with New York, I was merely reusing the example. I see what you're saying, but I disagree with your assessment of the implications.
Firstly, the money doesn't go through a Federal Bureaucracy, only the actual implementing law and a minimal amount of coordinating force should be Federal. Local collection, and enforcement have always been the basis of these kind of coordinated tax. A simple example is the UK's council tax (a property tax). This tax is a national level law, but collection, enforcement and rate setting is done solely by municipalities and they have an incentive to do it right because it goes straight to their budgets, it's not laundered through the treasury. Similarly VAT has one Europe-wide accord which sets out the framework but enforcement, rate setting and revenue is done on a national level.
Secondly, because you can allow a variation in rate the effect on states with high property taxes will be minimal. So why is a little change a bad thing? States still get to set their own rates. (And besides California's property tax system could do with looking at, it's a mess and no one will fix it because it's a political third rail)
Finally I challenge you to come up with a better solution? Use tax isn't working and in itself is barely worth the transaction fees the banks charge for receiving so many small payments. At least with a coordinated system you could actually get the taxes and settle them in bulk.
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I guess taxes weren't tyrannical enslavement by men who would be divine kings, after all.
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