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Amazon Folds In California Sales Tax Deal
theodp writes "In a deal indicating all sides appear ready to call a truce, the San Jose Mercury News reports that Amazon.com is offering to back down from its referendum drive to repeal an online sales tax in exchange for a one-year moratorium on collecting the tax. Under the deal, Amazon would agree to begin collecting the tax from California residents in September 2012, unless Congress takes action on Internet sales taxes before then. The development comes a day after a NY Times editorial ripped Amazon over its sales 'tax dodge.'"
Amazon also agreed to join with brick & mortar stores to begin lobbying Washington for a national internet sales tax. Think about that.
While thats true in theory, in actual practice the onus is on the retailer to collect sales taxes. The corner store here couldn't get away with not collecting sales taxes and then saying that it was up to their customers to deal with it. Frankly, I dont think there should be two sets of rules, one for brick and mortar stores and one for online. Especially when just about everything I order from Amazon ships from within the state. If I am in california and buy something from a company with a presence in California and my purchased items ship from California to me I should pay California sales taxes.
"Have you ever thought about just turning off the TV, sitting down with your kids, and hitting them?"
Sales tax is the most regressive form of taxation in the United States. If sales tax is 30%, that means the poorest of the poor are paying an effective tax rate of 30%, because they need to spend every penny they make in order to survive. Meanwhile, if you look at someone who makes $30 million a year, spends $2 million on taxable goods, and invests or saves the other $28 million, they end up paying an effective 2% tax rate.
It's obviously not "fair" to tax each person the same dollar amount. Why do people think it's "fair" to tax each person the same percentage? I'd call it most fair to impose the same financial burden on each person through taxes, which means that we're able to take a much, much larger percentage of a very rich person's income before they're seriously inconvenienced by it.
Why should Amazon be able to avoid paying taxes while any other business in the state does?
I'm sick of corporate America being treated like royalty. They have more voting power, more funds, lower taxes, and seemingly unlimited resources to control the political landscape to the detriment of the consumer. When they start hiring and stop giving all their money to their CEO's, perhaps I might have more sympathy, but until I see they are actually interested in supporting the states and municipals where they do business, then I can't seem to shed a tear for them.
All this occurred because customers flock to Amazon like buzzards to a carcass so they can buy merchandise without having to pay tax (outside of WA).
I don't buy books from Amazon because I avoid taxes, I buy from them for the convince of wanting something and having it two days later without having to waste an hour to go get it. I like local bookstores for when I don't know what I want, and just want to browse... Borders did not deliver well on either use case.
Thus is Borders dilemma - why would I support them over Amazon? You get none of the happy feeling of supporting a small local bookstore. Yet you get none of the vastly larger selection that Amazon has. Borders were huge, but what was really in there? I always found a better selection either at a small local bookstore or as I said Amazon, and that was what really killed them.. there is no room in the middle for something inherently specialized where small local businesses can do a better job addressing regional tastes in books than a large chain.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
One more reason to leave California.
If you pay the use tax as you are supposed to, this doesn't matter. If it does matter, then it shows the point of why Amazon should collect sales tax...
In case anyone forgot, the US gov't - and by extension the states - aren't automagically entitled to a piece of everything.
Property taxes are generally to provide for local services, police, fire, streets, education.
Income taxes are generally meant to fund the operation of government, and its (allegedly) limited functions.
Gas taxes are essentially a user fee, to fund use of the highway system (and ironically to help fund the poor struggling oil companies through tax breaks).
Sales taxes are likewise LOCAL in function - they're justified by the 'infrastructure' that allows commerce to happen.
So why should internet retailers pay local or state sales tax? Everything's already been paid for at least once.
In terms of the bandwidth needed to secure the transaction and the shopper, both the shopper (through his internet fees) and the vendor (through his bandwidth charges, etc) are already paying for the hardware - wires, property easements, hefty communication taxes. In terms of shipping the goods from the vendor to the customer, someone on one end or the other is paying postage that supposedly already covers this. The seller, through the price of his goods, covers his business costs, property taxes (and the concomitant services already covered therein), etc.
About the only thing that isn't explicitly or implicitly paid for in an internet sale is the bureaucracy involved in administering, levying, and collecting the tax. Put another way: without internet sales existing, government operates, and provides a certain level of services to the public. This should be covered by tax revenues. Now add internet sales to the picture. What specific service is the state providing that it didn't provide before? I can't think of a one. Sure, the police have started branching out their pedo squads to the interwebs, and the state Attorneys General have some more fraud cases to investigate, but I doubt either of those functions have been a net increase in manpower or services - rather, they've drawn resources from other functions already performed to add these to the mix.
Yes, cue the Liberal Left posters who cheerfully want to pay more taxes. I invite them to do so. But the fact is that the US and State governments are not entitled by their very existence to a piece of every transaction that takes place in this country.
We the people need to fund our government adequately, and we do so through a varied panoply of taxes. But a bewildering array of taxes doesn't mean that we need to sit back passively and let ourselves be double-dipped just because legislators have built too confusing a structure to figure out.
-Styopa
"While thats true in theory, in actual practice the onus is on the retailer to collect sales taxes."
No, it's not. In fact, if the retailer is in a different state, with no "physical presence" in the purchaser's state, then it is highly illegal -- unconstitutional in fact -- for the retailer to collect sales tax.
To get around this, states have enacted what they call "use taxes". But it is up to the individual -- very definitely NOT the retailer -- to report on, and pay, use taxes.
In that case the voting machine should be designed to smack them. A giant ACME cartoon style ballot blow to the head would also be acceptable.
Are you fucking kidding?
The Blue states are the only ones making any money. The red states are propped up with farm subsidies and other federal welfare.
The "leftist" state of Germany is the biggest economy in the EU, they are pretty much the only thing keeping it solvent.
Holy shit, so much THIS. Germany has amazing safety nets, and at the same time understands how to properly allocate labor in businesses, going so far as to not laying people off when times get slow, but keeping people on the payroll to train and prepare them for when the economy rebounds so ramp-up is much faster.
Germany is single-handedly keeping the Euro together at the moment, by backstopping the PIIGS with crumbling economies (Portugal, Italy, Ireland, Greece, and Spain). They can be as "socialist" as they want.
Then work to change the law. If need be break it in public and be arrested. Breaking the law in private shows you to be nothing more than a common thief. You pretend to have some lofty ideals, but you won't stand up for them so we know this not to be the case.
Um... I think you need to look at a US map... because what you said is exactly the opposite of what is true here.
http://money.cnn.com/news/storysupplement/economy/state_debt/index.html
http://www.nytimes.com/interactive/2008/11/17/us/20081117_budget_graphic.html
http://en.wikipedia.org/wiki/File:Red_state,_blue_state.svg
The blue states tend to be in the most debt.
Because of those subsidies I mentioned.
Take a look at who gets how much federal funding for each dollar they send to the fed in income tax.
http://taxprof.typepad.com/taxprof_blog/2004/09/red_states_feed.html
Sales tax does not work for securities and investments.
If securities were taxed at 30% when you purchased it, it would mean that you have to get a 30% return on your money to break even. Stock traders would not exists because they would have to pay taxes every time the purchase something, even if they lose money. Commodity markets will fail for similar reasoning. If you are a middle man who can add 10% value to a product and resale it, you would still lose money.
Income tax is much more appropriate in these scenarios because you only are taxed on the money you gains. If you buy something at $100 and sell it at $110, you are only taxed on 10 dollars of income. With a sales tax, you make $10 in income but have to pay $30 in taxes resulting in a net loss of $20.
Not paying tax is the same as stealing from your fellow man? So basically most ultra rich and all of the the poor people are stealing from the middle class.
I have a theory. California is going to give them a year without paying taxes. Amazon is going to take a year to start building a shipping center in a nearby state with a much lower population—say, Nevada—and in 364 days, Amazon will announce the immediate closure of its California operations.
Check out my sci-fi/humor trilogy at PatriotsBooks.
1. The tax foundation.
http://www.taxfoundation.org/research/topic/92.html
for an updated one. A major news outlet is about the least worthwhile source ever.
http://www.taxfoundation.org/research/show/22685.html
That is sourced from the census consolidated federal funds report from 2005.
Here is a link to that.
http://www.census.gov/govs/cffr/
Page 23 of the 2009 report should prove interesting to you.
Personally, I support the Quill Corp. v. North Dakota ruling, and don't think a business should pay any sales tax unless it has a physical presence in the state.
So if Amazon does have a presence there, not just business partners, but an actual wholly-owned subsidiary, then in my mind that means they need to collect sales taxes on CA customers, since everyone else has to follow that law too (the Quill case dates to 1992, and was really a sequel to a case decided way back in 1967 about the same thing). We need to be clear there's a difference between this case, and other cases where an online company truly has NO physical presence in the state, and only sends things there through shipping companies (who DO pay taxes to the states they operate in).
My question, however, is why Amazon has a wholly-owned subsidiary in CA, and how this helps it with tax evasion. If they want to evade taxes, shouldn't they just concentrate all their operations in one state, preferably one like Wyoming where very few customers would have to pay sales taxes? Or is this because they want to have many warehouses spread across the country to keep average shipping times low, and they make each regional warehouse a different subsidiary?
Personally, I'm surprised this went anywhere at all for them: how can you possibly argue that a wholly-owned subsidiary is in fact a separate company? If you own it, it's part of you. I agree with their argument (in the NY case) that their affiliates are really separate companies, and that they shouldn't collect sales tax in a state just because there's some affiliates there (however, if the customer is in the same state as the affiliate, they should). Just because I contract with a separate company to allow them to sell some stuff on my website doesn't mean they're the same company as me; the ownership is totally different. This would be a little like Walmart collecting Michigan sales taxes on all its purchases in all its stores nationwide, just because it sells a few products from a company that's located in Michigan (I know, it's a bit of a stretch, but selling someone else's products in your store is exactly what Amazon does with their affiliates).