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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.
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?
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:[.]
You are free to move to a country that doesn't tax its citizens if you're unhappy about it. I think you'll be hard pressed to find a developed country that doesn't tax it's citizens to provide necessary services.
-- 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
I don't know, I hear Somalia's quite the libertarian paradise.
This is the voice of World Control. I bring you Peace.
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.
That money they're taking... why do you think it has value?
I am TheRaven on Soylent News
Why don't we just replace all state sales taxes with one federal sales tax?
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
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?
... 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:
So normal retail sources dont have transportation costs or generate jobs?
Again. If I live in a state, order something from someone in the state and the goods are shipped within the state to me, why should I not pay taxes just because I used the internet to place the order?
If you are against sales tax in general, fine. But thats a whole other conversation. I can think of no logical reason to exclude internet orders from existing tax laws just because the order was placed on the internet. What if I have a regular store front but I have customers who walk into my store buy things on a web kiosk I setup and then hand them the items. Should that also be excluded from taxes?
"Have you ever thought about just turning off the TV, sitting down with your kids, and hitting them?"
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?
-- Abraham Lincoln, signer of the Revenue Act (first U.S. federal income tax), August 5, 1861
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.
Can you provide an example of a functioning country with a libertarian government?
"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?
"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.
I won't deny a single thing you've said - I agree with pretty much all of it. I disagree with the currently popular remedies.
Many, many moons ago I had an epiphany, during the days of Bush I - whom I thought did a pretty good job in office. It was at that time that Resolution Trust was being set up as part of the Savings and Loan bailout. There was a co-worker, more conservative than I, who was griping about all the money being given to the poor, and at the time I was inclined to agree with him. Then as I watched more of the Resolution Trust process, I realized that the whole Savings and Loan problem was about rich people bilking poor people, and many/most of them somehow dodging any blame or need for restitution. Instead, THEY got the money, and my money went to backfilling the victims. In essence, it was a "wealth transfer" from taxpayers like me to crooked bankers.
At that point I realized that very likely, more of my tax dollars go to people making more than me than go to people making less than me. More of my wealth transferred UP than DOWN. When we talk about the budget problems, first off most of the focus is on the discretionary budget, which is a pittance. I'll give what's-his-name credit for looking properly at Medicare, though I disagree with his diagnosis and solution. I'm also unhappy that only peace-niks are looking at the defense budget.
In brief, I believe we have a market failure. Today when people say "socialism" it's as if it's an inherently bad word. I'm not in favor of it either, or rather I'm in favor of some hybrid system. But here's the point... The essence of Free Market Capitalism is that it allows a broader spectrum of ideas and resources to be mobilized for solving societies' problems. This broad spectrum should enable more efficient and economical solutions, so that it's cheaper for the customers AND allows the producers to enjoy a profit, both at the same time.
IMHO that's what's broken. Many of our industries are so consolidated that they're no longer Free Market Capitalism - they're essentially central planning, just in a few corporate boardrooms instead of government buildings. The upshot of this is that we have the most expensive health care in the world, with mediocre results. Our economy is doing less efficiently at health care than that "evil central planning." - though it is VERY profitable. We also spend more on defense than anyone in the world by a large margin, and I'll agree that we get a lot for it, but it would be really interesting to understand the cost effectiveness, and also how much if it is really a hidden corporate subsidy, both by contract and by "making a safe place to do business." (or read, export American jobs to cheaper places - paid for by my tax dollars)
Social Security is a different issue. Besides being outside the ordinary budget, I'm generally in favor of raising the age. What I really wish is that there were some way to tell when we were going to die. I have a reasonable expectation to live to 90+, so I'd prefer to keep working - I'm not ready to start coasting to the grave, and I know that golf and fishing can only go so far. But there are also those with a family expectation much shorter, and for them at my age they'd be closer to the grave than me. There's no one-size-fits-all solution. Or another way of putting it, the necessary decisions are way above my pay grade - I just wish someone were seriously addressing the issue in a complex - not simplistic, way.
Finally, since 2000 my financial boat hasn't been taking on water, but it has been settling lower in the water. But I don't blame taxes for that. I blame "my executives" who continue to enjoy faster-than-the-economy compensation increases at least partly by making sure my pay raises are slower than the economy, and compounding the problem by shipping US jobs overseas. In the past decade they've cashed in - but I guess letting the 3rd lowest top-margin tax rate in history increase from the 3rd lowest in US history to the 4th lowest in US history is too onerous.
Enough for now...
The living have better things to do than to continue hating the dead.
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.
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.