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.'"

Comments

Just that pesky Constitution

[Anonymous Coward]

Damn those federal rights over interstate commerce.

Re:Just that pesky Constitution

[EraserMouseMan]

Which have been abused and used nothing today like what the framers had in mind.

Re:Just that pesky Constitution

[Seumas]

We've amended the constitution, where necessary. You know, for things like eradicating slavery and allowing women to vote. I don't really see where confusion is over the constitution. People always talk about how it is the job of the SCOTUS to "interpret the constitution", but last time I read the document, it began with "WE HOLD THESE TRUTHS TO BE SELF-EVIDENT". *Self-evident*...

The document seems pretty clear on things like free speech, the right to bear arms, the right to due process, and the right to be protected against unlawful search and seizure. The only reason to "go back and clarify" these things if if people actually mean "re-write to fit my political viewpoint which contradicts what the constitution says" instead of "clarify".

Yes, the constitution was written by imperfect men, but it's disingenuous for us to say things like "they were just farmers and slave-owners and have no relevance to today's society". The document aims to protect us against many things that went wrong in other societies. Things that *WE* seem to often fail to comprehend, today. Things that may seem irrelevant to us *because* of the protections the document has laid out for so long that we might be all too willing to fuck up, under the premise that "life is really different today".

I don't see a single thing in the constitution which does not belong there, for all of time and we're always free to add amendments if we agree that they are absolutely vital and valuable.

Re:Just that pesky Constitution

[Scareduck]

Oh, nonsense. Article I, Section 10:

No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it's inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Controul of the Congress.

In other words, what California and New York and all the whiners who are trying to install sales taxes on material from other states is a straightforward violation of the Constitution.

Re:Just that pesky Constitution

[sorak]

The document seems pretty clear on things like free speech, the right to bear arms

The right to bear arms shall not be infringed. Does that literally mean no weapons regulation period? So can you sell hand grenades to children? Or by "arms", do they only mean firearms? And does it matter that they had no standing military and that the need for a well-regulated militia was part of their rationale? Also, doesn't "well regulated militia" imply the government's authority to regulate militias? I think there are a few legitimate questions to ask. Even if you know your answer to every one of them, I don't think they are all clearly written in the second amendment.

Re:Just that pesky Constitution

[ceoyoyo]

Not being from the US, my idea of a duty is an EXTRA tax on imports, over and above what would be paid if the goods originated in the state. Duty is a method of favouring local goods by imposing extra tax on imported goods. So charging regular sales tax on out of state goods isn't a duty, it's effectively cancelling an anti-duty, and thus doesn't violate the article you cited.

Re:Just that pesky Constitution

[jcr]

Actually, the Declaration of Independence is law. It's an act of Congress, and as Judge Napolitano has pointed out on several occasions, if you have a copy of the United States Code, it's there right in the front of the first volume. It is in fact the beginning of American legislation.

-jcr

Re:Just that pesky Constitution

[Solandri]

We have something called a Supreme Court for deciding semantic arguments such as yours when the wording of the law is ambiguous or could have multiple interpretations. And the Supreme Court of the United States has decided that interstate sales taxes are indeed a duty prohibited by the Constitution.

if he's so concerned

[jaymz666]

He should pay the use tax and be done with it, like a law abiding citizen

Re:if he's so concerned

[geekoid]

Actually it creates a firm ground in which we can build a thriving, prosperous, and advancing civilization.

Re:if he's so concerned

[Aladrin]

And those other companies pay the taxes. And need the police support. Etc etc.

When Amazon ships something to you by UPS, and it gets stolen, Amazon doesn't call the police to report a theft. They call UPS and UPS handles it, because the package was in their care.

Perfectly sound legal arguments

[Eggplant62]

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.

Re:Perfectly sound legal arguments

[Bill_the_Engineer]

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 think the problem Amazon is having is that they had associates that were based in California. These associates have a physical presence in California and forces Amazon to abide by state law. Amazon wants to continue to have an associate program, yet not have to keep track of sales tax for each state that an associate exists. This is why Amazon is lobbying for this referendum in California.

Re:Perfectly sound legal arguments

[OverlordQ]

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?

Because it's easier trying to get the corporation to pay a sales tax then going after their own citizens for not paying the use tax.

Sponsors

[crow_t_robot]

This Slate article has been brought to you by Best Buy, Target, Walmart, etc.

It's a practical nightmare

[localroger]

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.

You work and toil and earn bread, and I'll eat it

[Kohath]

It is the eternal struggle between these two principles -- right and wrong -- throughout the world. They are the two principles that have stood face to face from the beginning of time, and will ever continue to struggle. The one is the common right of humanity and the other the divine right of kings. It is the same principle in whatever shape it develops itself. It is the same spirit that says, 'You work and toil and earn bread, and I'll eat it.' No matter in what shape it comes, whether from the mouth of a king who seeks to bestride the people of his own nation and live by the fruit of their labor, or from one race of men as an apology for enslaving another race, it is the same tyrannical principle.

-- Abraham Lincoln, October 15, 1858 Debate at Alton

Unethical? Fix the Law Then.

[salesgeek]

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.

Let's just do away with sales tax

[spiffmastercow]

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.

Re:Let's just do away with sales tax

[FooAtWFU]

California has a big state income tax, and look at the volatility of their budget! Just as a practical matter: when you tax incomes, especially rich peoples' incomes, your tax revenues begin mimic the performance of the stock market to an uncomfortable degree.

A sound property tax system (unlike California under Prop 13) is probably a much better idea for most state governments, housing bubbles notwithstanding.

A question for slashdot

[Okian Warrior]

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?

Re:A question for slashdot

[BCoates]

NH is mostly a mixture of exurbs and retirement/vacation homes for Boston, so it's economic model is "leech of the city" and it's social safety net is "move to Massachusetts". California has nowhere to beggar-thy-neighbor to.

New Hampshire has the lowest birth rate in the nation, California's is above-average. Children are expensive but necessary.

Small states tend to do a better job getting their money's worth from the federal government. California is a massive wealth exporter to the rest of the country. The California federal tax/spending shortfall is about the same size as the California budget shortfall.