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Amazon Poised To Get Cut of CA Sales Taxes
theodp writes "Eager to host Amazon warehouses and receive a cut of the tax on sales to customers statewide, the LA Times reports that two California cities are offering Amazon most of the tax money they stand to gain. After agreeing to collect California sales taxes beginning in the fall, Amazon is setting up two fulfillment centers in San Bernadino and Patterson, which will gain not only jobs but also a tax bonanza: Sales to Amazon customers throughout California will be deemed to take place there, so all the sales tax earmarked for local government operations will go to those two cities. The windfall is so lucrative that local officials are preparing to give Amazon the lion's share of their take as a reward for setting up shop there. 'The tax is supposed to be supporting government,' said Lenny Goldberg, executive director of the California Tax Reform Assn., of the proposed sales-tax rebate. 'Instead, it's going back into Amazon's pocket.' Sen. Mark DeSaulnier added: 'It seems like the private sector finds a way to pit one city against the other. You can't give away sales tax in this manner.'"
Special tax deals for individual companies is a recipe for corruption.
-Dave
Don't know the full reason/details, but my company will not travel to california, and often turns down deals with california companies because they are such a nightmare to work with.
You can't give away sales tax in this manner.
If Amazon were decent about it, they'd refund it to the customers.
What could possibly go wrong?
I thought Amazon folded rather abruptly on the CA sales tax issue after having put up a big fight for years. Now I know why. Look for this deal to be cut in other states as well.
If you want to know why your taxes are so high you only need to look at the deals which are given to major corporations to attract and retain their business. It's getting to be a bit like CEO compensation packages. Will the best ones make you money - sure. But that money is collected from everyone else - essentially a tax increase on the everyman.
The fact that governments are pitted against one another just means that the downward spiral will continue, as each locality offers to unlevel the playing field to favor their locality.
Is it just my observation, or are there way too many stupid people in the world?
Blame the design of the tax laws, and the city officials who are willing to give huge tax breaks to major businesses. We see this type of thing all the time in the building of major sports facilities. It's welfare for billionaires.
make imaginary.friends COUNT=100 VISIBLE=false
The same could be said almost verbatim for US firms in many parts of the world.
Can local government just "give" money back like this? Seems like it's public money, surely it can't just be given to a private company?
Sounds like an excellent time for California to rewrite or eliminate it's state laws on sales tax.
'The tax is supposed to be supporting government,' said Lenny Goldberg, executive director of the California Tax Reform Assn., of the proposed sales-tax rebate. 'Instead, it's going back into Amazon's pocket.' Sen. Mark DeSaulnier added: 'It seems like the private sector finds a way to pit one city against the other. You can't give away sales tax in this manner.'
Yeah, they mad.
Instead of complaining about how this is evil corruption, why not abolish the ecommerce sales tax scheme all together? None of this would have happened if CA never tried to tax ecommerce in the first place.
It seems like this story is trying to make Amazon look bad or trying to make cities that are hunting for Amazon's money look bad, because they are providing the most competitive environment to the other cities and government officials don't like it. It's a story that needs to be cut just like Gordian Knot.
Yes, governments require money.
Yes, private enterprise creates money, so governments require private enterprise.
So governments competing for money of private enterprise makes sense. Some argue that this is wrong, they want 'one government' even 'world government' and 'world taxes', etc., all just to KILL competition (and majority of the mis-educated public believes that government increases competition, not that it destroys it in every way possible).
But of-course the real issue needs to be distilled here just like the Gordian Knot needed to be cut to be solved:
1. Sales taxes and income taxes should not coexist. Income taxes are illegal and collected illegally and sales taxes, excise, import taxes are legal and they are the preferred way to run governments, because they can be moderated by the people's purchasing and saving behaviour, and we shouldn't believe in propaganda that we exist to support the government structure and that individual rights are secondary to collective.
2. Governments SHOULD HAVE TO COMPETE for money. Governments that compete for money are governments that are much less spending happy and are aware that their financial situation wholly depends on the financial situation of the actual market and not on their ability to ENSLAVE people through taxing their labour, DESTROY competition by creating, supporting and bailing out monopolies/oligopolies and STEAL liberties and freedoms from people through growth of government offices due to all of the laws and regulations governments come up with.
People must be free to choose between different governments and governments must be local, not global.
Global government above you is a single point slave owner that you cannot escape.
You can't handle the truth.
Since CA has state income tax, think of how much money it will reap by those taxes on the workers working at the facilities. Plus all the other tax money from the increase in revenue the salaries those people will be spending in the areas....
Special tax deals for individual companies is a recipe for corruption.
Not really. It's a hold over from the days when sales tax first started. States let businesses keep a portion of the sales tax to cover the costs of calculating it and remitting it. Back then, there were no computers and the like. However, the laws were never updated so, today, it is a windfall for them. But it isn't a "special tax deal." In the 40s, it made sense. Today, it doesn't. But then again, it does negate the notion that it is too expensive for online businesses to collect and remit sales/use tax when they actually would be getting paid to do so.
Apparently, you can give away sales tax in that manner.
who prays for Satan? Who in 18 centuries has had the humanity to pray for the 1 sinner that needed it most? ~Mark Twain
Two cities get to decide what to do with state sales tax?
This kind of deal just shouldn't be legal.
'The tax is supposed to be supporting government,' said Lenny Goldberg, who, despite being executive director of the California Tax Reform Assn., sucks at economics and would rather be "right" than increase the tax base of either of these communities.
FTFY. However, in defense of his position if not his actual reasoning, it is shitty that these cities are offering Amazon a deal when presumably they haven't offered local brick-and-mortar businesses the same. No doubt in a few years when Amazon is perceived to have monopolized some business (the "selling everything for a reasonable price while providing good customer service business," perhaps), everyone will blame the evil free market.
Corporations play one state or city against another to extract tax breaks. They threaten to move the plant here or there, and get different localities to bid against each other with tax reductions. The burden falls on the rest of us.
I have a proposal for how to solve this problem. I think the states should increase their bargaining power against companies by forming a union. We could call it the "United States of America."
Here's how it would work. All the states would agree to be bound by a rule that when a company considers locating a facility in more than one place, none of those jurisdictions can offer it a tax break without the consent of all the others. Any jurisdiction that believes a company is considering another location could make a complaint under this requirement. If the company then chose a different location, and got a tax break there, it would be fined twice the amount of the tax break and the fine would go to the jurisdiction that made the complaint.
Of course, the states already have a so-called union. Too bad it sold out to the companies.
rms, http://stallman.org/articles/states-union.html
Yeah, it sounds like a good deal except that a lot of towns are ignoring the hidden costs of these deals. That huge company is going to require a lot of extra government services in the forms of things like electricity, water and sewer, roads, etc. Plus with the extra people, it's going to require more of things like fire nad police services, welfare benefits, unemployment benefits, public parks, postal services, yadda yadda yadda. What looks like a $5,000,000 bonanza, when all is said and done, ends up costing the taxpayers a crapton of money.
These deals ought to be illegal, period. Government at all levels, from federal all the way down to local, should be prohibited from making sweetheart deals to one company without making them for all companies. It would have to be a federal law, since there's no way in hell that cities or states would make such laws on their own. That's the only way that the playing field could be leveled for everyone. Maybe now that corporations are "people," some small companies should get together and sue using the Equal Protection Clause, under the theory that government is prohibited from offering Company X a sweetheart deal that Company Y, Company Z, and every other company doesn't have access to. It's a little like selling bus tickets to the Smiths for $2 each and selling the same bus tickets to the Johnsons for $8.
There is no telling how many trillions of dollars aren't being collected from companies because of deals like this, how much money is being sucked out of local municipalities' and states' coffers and being paid by people who live nowhere near where the money eventually ends up.
Apparently we now own part of Amazon. I expect we will get to have a say in how they run their business. I have a co-worker who recently went to the polls and voted for everyone that was NOT in office. I think California should do the same. If you're going to tax, tax. Don't make us wish we didn't even have government.
OK, so this California Tax Reform Association seems to be set up by a Democrat (warning bells here) who seems to be solely focused on Internet Sales Tax and enforcement of that tax.
In the interest of full disclosure, the summary should mention this fact, as well as the political affiliation of the Senator who is complaining (yes, he too is a Democrat)
Opinions one way or the other of this move to grab a sliver of Amazon's tax revenues notwithstanding, the inclusion of quotes from a decidedly rabid pair of opponents is far from an even-handed treatment of the story.
Leaving aside the question of how morally wrong this is (very), isn't it completely illegal?
They report on this like it was a new thing, just invented for amazon. It's not. Whenever a large employer has plans to move into a region they negotiate with several potential local governments to find themselves the best deal. In some cases one city might have an advantage like a rail line or a port, and can offer less of a deal, while another may have negatives... poor roads, bad zoning, etc... and they need to offer a lot more.
My father was VP of a company for years and they set up several factories. The local governments would give them free water, electricity, sewage, etc... You may think that's just a give-away by the city, but what the city would get in return is 1000-2000 employees all paying income taxes... Those same employees would then spend the money they earned, usually in town, and generate sales taxes. The money they spent would bring in other smaller businesses that wouldn't get the same breaks as the larger employer. By far the city profited more from the deal than they lost. That was the point of the deal.
Now we know why Amazon has been pushing so hard for taxes, because it gets a slice.
Hey Amazon? You're not the only online retailer. Start pulling this and I'll just stop using your service.
What do I know, I'm just an idiot, right?
Well, clearly you can.
Cities, states, and countries are constantly competing to be the government to vouch for a business entity's credentials (i.e. incorporation services) or to provide other government services for a business (e.g. water, sewage, roads, police, courts to settle disputes).
For these services, sometimes the government wants direct taxes. Other times they are primarily concerned with jobs. These jobs provide residents with money to pay other types taxes (individual income, sales, gas, property, etc) as well as helping other businesses (e.g. restaurants, stores) and decreasing the need for public services (i.e. food stamps).
Sometimes there is corruption in the process. More often than not, the government has decided that having the business is an overall benefit. The government may be incompetent and make a poor decision that doesn't necessarily mean corruption is involved. In any case, you need to look at the total effect (direct + indirect taxes + services that increase + services that decrease) to see if it was a good deal.
"Sales to Amazon customers throughout California will be deemed to take place there, so all the sales tax earmarked for local government operations will go to those two cities."
In California, there is often a local city or county percentage added to the state sales tax. The cities can do whatever they want with *their* portion of the sales tax. The state's portion goes to the state.
Caring about party identification more than what they're actually saying is a sure sign of partisan hackery.
I am officially gone from
I hope all you people who were whining about Internet retails back when they were untaxed, not "paying their fair share" and having an "unfair advantage" over brick and mortar stores, are happy with the results. Now one of the retailers turns around and buys privilege from the government, actually benefiting from these taxes.
I'd write more, but I'm laughing too hard. :)
Liberty in your lifetime
'It seems like the private sector finds a way to pit one city against the other. You can't give away sales tax in this manner.'"
52 counties in California and each has its own way of doing business. They do it on purpose so that they can divide us and fuck us. You never know when you drive over a county line what the laws are going to be like. It's supposed to preserve the interests of locals and that's true; privileged, entrenched interests that are continuing to carve California up into ever-smaller pieces for their own profit at the cost of everything that makes California great save location.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
...because that's what they're going to find in San Berdoo.
"You might as well get your son a ticket to hell as give him a five string banjo." -unknown minister
As in the Congress of the US has so mangled our tax code that is nothing more than one targeted tax break after another. We just had a story about tariffs, which in the end are nothing more than using tax policy to benefit an industry.
This is why Washington and all politicians are so strongly against a flat tax or similar, they can no longer dole out favors with our money.
* Winners compare their achievements to their goals, losers compare theirs to that of others.
That's actually true. Go to any Swiss bank while traveling to Switzerland. Put a briefcase with $20k in unmarked, non-sequential bills on the counter. Tell them you want to set up a numbered account, and tell them you are not a Swiss citizen and you do not have a Swiss residence. There will be no problem or objections until they find out you are a US citizen.
Not really. The problem is that political parties have their agendas. If a Republican is giving an argument against something, and couching it in terms that seem to have a liberal bent, it is significant. If the speaker doesn't truly believe in the argument they are making, why should we?
It doesn't matter to me what the party of the speaker is, if they believe the argument they are selling to the people.
If a used car salesman approaches you in the lot, as if he was a customer and chatted up how he was interested in the same vehicle you were, while his buddy moved in for the sale, isn't that rather dishonest?
Maybe in simpler terms: If a duck starts barking, WTF is going on, exactly?
The issue here isn't how "unfair" this is to local retailers, but rather how the tax is being paid back to Amazon, in defiance of the law that was written (though there is nothing illegal about it, and it's quite a common practice). Their argument is a misdirection - they'd like you to believe that they feel for the poor local retailers, and in a happier world, those retailers wouldn't pay sales tax (here's another hint: they don't pay sales tax - consumers do). The argument is a play to the conservative base, since the liberal base already has no problem with taxation; but it's a false argument. The speakers don't believe it, and it doesn't stand a thoughtful analysis.... however, for the majority who here it, their response will be knee-jerk (or at least the speakers hope for that reaction)
I bet Best Buy or Circuit City would just LOVE to be able to keep 5% of that 7.5% sales taxes they charge around here!
I'll bet they are fuming.
Also, we all know these are going to be warehouse workers; Bureau of Labor Statistics shows there's something like 3 million warehouse workers and 4 million supervisory staff.
In politically correct terms: Every last one is going to be an undocumented immigrant working as a contractor for a labor outfit.
In correct terms; Every last one of them is going to be an illegal immigrant working for a slave trader.
Finally, township sweetheart deals are an invitation for corruption. It's an incentive for bribing, it's an incentive to sell town services and tax revenue, it's an incentive to mis-allocate resources (Roads, sewage, water), and it's an invitation for the business to utterly screw the town (See the Data Center Google is locating in Oklahoma). At Best it's a zero-sum game.
San Bernardino is quite familiar with the costs. They have been getting companies from high tax environments, ex Los Angeles, to relocate to San Bernardino for many years.
Plus not many people will be moving to San Bernardino. Between the unemployed and those with long commutes to Los Angeles and Orange counties Amazon can probably find most of the people locally.
...from the long-established (and equally execrable) practice of giving property tax breaks for the construction of factories.
Warning: this article may contain humor, sarcasm, parody, and perhaps even irony. Read at your own risk.
... During the housing boom they built budgets on that income ...
I don't know why you characterize that behavior as Republican. That is precisely what California Governor Gray Davis (D) and the Democratic majority of the California state legislature did. Its a large contributor to the current California budget crisis. It was a large contributor to Davis getting recalled, thrown out of office before his term ended by a special election.
Both parties are guilty of such short sightedness.
... No jobs just houses in the dessert ...
That is not as silly as it seems. Some of the people in those houses commute. They made a conscious tradeoff of time on the road for a nice house at a far far lower price that something close to work. One night my girlfriend and I drove out there to have dinner with some of her friends. On the drive I thought they were nuts to live out there. When I saw their house I changed my mind. It was a rational decision. Not for everyone but rational none the less.
They may have overbuilt, but overbuilding happened all over southern California.
The example provided in this link http://taxdollars.ocregister.com/2009/09/17/where-do-your-sales-taxes-actually-go/36927/ shows the referenced city only getting 8% of the tax haul in return. So not the haul many are thinking. On the other hand, the city gets lots of warehouse jobs at ~$25K. This might have the same affect as described here:
"2. Wal-Mart’s Costs to Taxpayers
Wal-Mart has thousands of associates who qualify for Medicaid and other
publicly subsidized care, leaving taxpayers to foot the bill.13 For instance in Ohio
Wal-Mart has more associates and associate dependents on Medicaid than any
other employer, costing taxpayers $44.8 million in 2009.14
According to estimates, Wal-Mart likely avoided paying $245 million in taxes
2008 by paying rent to itself and then deducting that rent from its taxable
income.15"
Quote ref: http://advocate.nyc.gov/files/Walmart.pdf.
Amazon Warehouse Pay ref: http://www.glassdoor.com/Hourly-Pay/Amazon-com-Warehouse-Associate-Hourly-Pay-E6036_D_KO11,30.htm
As we move away from Brick and Mortar stores, I suspect cities are going to have to start demanding a cut of sales taxes paid by a city residents when buying online.
In all seriousness: what cities require their residents to pay income taxes? I can think of only one (New York City). Maybe other mega-cities in the US charge income taxes, but I doubt they would be on the short list for companies moving factories there.
It is a sickening practice, seeing the desperate and outright corrupt curry favor with corporations demanding to be given the 52nd card in the deck in exchange for crumbs - and those just until a better offer comes along.
PS - Irony: the former Confederate states more than willing to work for corporations (mostly foreign!!) for pennies on the dollar because of their hatred for all things union.
Why? For federal taxes US law is fairly straightforward. Why does a foreign merchant need to bother with US taxes anyways?
(here's another hint: they don't pay sales tax - consumers do).
It's more complicated than that.
Sales taxes, like all other taxes, are usually partially paid by multiple people. If the seller passes the full amount of the tax to the buyer, then there will be fewer buyers, so the seller will pay for it partially by not selling as much stuff as he used to, and the buyers that he does get are paying the extra 5%. So both buyers and sellers end up contributing to the cost of the tax.
Read about Tax incidence for more on the subject.
I am officially gone from
i support a federal government that is funded solely through sales tax and tarrifs (which are really just another form of sales tax) and state and local governments that are funded solely through income taxes.
Another angle on this opportunity that we may not be addressing is the working conditions at Amazon fulfillment centers.
Workers in Amazon's fulfillment centers often complain that they are "held to unreasonable metrics" and that they are "worked to death and then fired."
Employees are required to work through burning heat and freezing cold with hand held computers constantly nagging them that they're moving too slow. They have to run from pick job to pick job all day long.
One report claimed that:
"So many ambulances responded to medical assistance calls at the warehouse during a heat wave in May...that the retailer paid Cetronia Ambulance Corps to have paramedics and ambulances stationed outside the warehouse during several days of excess heat over the summer. About 15 people were taken to hospitals, while 20 or 30 more were treated right there, the ambulance chief told The Call."
There are numerous blogs and news stories on the matter, I'll share just a few.
http://seattletimes.nwsource.com/html/businesstechnology/2017901782_amazonwarehouse04.html
http://heizerrenderom.wordpress.com/2012/04/06/om-in-the-news-amazon-warehouse-jobs-push-workers-to-the-limit/
http://www.ohioworkerscompattorneys.com/2012/04/amazon-warehouse-employees-instructed-to-misreport-work-injuries.shtml
yep. the california state law that required Amazon to pay sales taxes to california even if it didn't have a presence there.
Capital gains tax should be illegal because it is essentially a variable tax based on how much inflation has occurred. All that is needed to steal the work done by the people is to inflate their money and charge capital gains tax.
They shouldn't, but the US has been putting a lot of pressure onto the Swiss government to reform their bank secrecy laws and to share information about the bank accounts of US citizens. In Switzerland, tax evasion is a civil matter, but the US prosecutes as a crime. Since Switzerland has many banks with international operations, it would be a major blow to Swiss economic objectives if the US government were to shut down all US branches of UBS and Credit Suisse. So they struck a deal to share account info for US citizens that have accounts in Switzerland with UBS and Credit Suisse. And that was a compromise - the IRS wanted Switzerland to share info about American account holders at ALL Swiss banks.
There are thousands of Americans who lie on their tax returns while hiding money in offshore accounts. The IRS is pursuing these account owners more aggressively than any other nation. Which is why it is harder to do business with offshore banks if you are a US citizen. US authorities are harassing bankers who accept US citizens, even threatening jail time if they ever visit the United States for aiding and abetting US tax evaders. They can literally pick them up as soon as they land at an American airport, similar to how an online Casino owner was apprehended when his flight to Costa Rica was diverted to the US (http://en.wikipedia.org/wiki/David_Carruthers).
Then there is the persecution of offshore ForEx brokers who take on US clients. Just because you are a foreign citizen operating from your own soil according to the laws of your own nation does not mean you escape the long arm of US trans-national jurisdiction. Sure, you can laugh at the US as you are tried in absentia, assessed fines, and sentencing to jail time, but one day a black van with tinted windows is going to roll up and ...
See http://www.findyourfx.com/blog/2012/03/07/us-citizens-can-not-open-account-with-overseas-forex-brokers/
Brokers not allowing U.S. clients
4Runner
4XP
ActivTrades
Alpari UK
CMS Forex
Dukascopy
I Am FX
FXCBS
FXPro
Go Markets
LiteForex
MIG Bank
TadawulFX
Pepperstone
Varengold
The hilarity of this is that other California cities didn't think of it first and make their own pitch to Amazon. Now you hear them crying "boo hoo". Other tax grabbing wankers are pouting, "Oooh, that's not how sales taxes are supposed to be used!". Winers! Taxation is corrupt in the first place, so you want to object to how that particular sales tax money will be used? Sounds like sour grapes! One local goobermint screwing another over money!: I'm LMFAO... Where's the popcorn?
Free market was supposed to make companies compete to bring the best service or product to clients, but it seems that now it makes citizen competing to offer the best profits to companies.
This is no more about having the invisible hand of market that matches offer and demand, this is just how to make the rich even richer
Tax the consumer with the tax rate of shipping address state/country/city
It is not entirely clear what you are implying here. But please note this:
"The procedure for opening a "numbered" account is exactly the same as for any other type of account. The bank must verify your identity and establish the identity of the beneficial owner. "Numbered" accounts are certainly not anonymous. With a "numbered" account your business within the bank is carried out not under your name but under a number or code. This is simply an internal security measure to restrict knowledge of the customer's identity to a small group of employees in the bank and apart from this a "numbered" account enjoys no additional privileges in terms of confidentiality."
Source: swissbanking.org, FAQs
Towns should not be eager to host Amazon warehouses. The jobs they bring in are terrible.
I am disappointed with Bezos and Amazon if they go in that direction. That's strike two as far as I am concerned. Strike one was when you shut off WikiLeaks cloud. Once again if the free market can't be trusted to do the right thing, we'll need laws that make this practice illegal. Read David Cay Johnston's Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill). It's an eye opener on how the big box stores have refined these tactics of pitting one community against another all the while extorting tax money and in the process they destroy small community businesses and replace business owners and knowledgeable workers with low paid jobs. We the consumers have the power. We have the choice. I gave up my Exxon Mobile card and stopped buying their gas long ago. I pulled my money out of Bank of America back in 2006. Unfortunately we have gotten lazy and we are just as guilty if we continue shopping with them.
There's always an alternative
I read the headline as: "Amazon Poised to Get Cut of Certificate Authority Sales Taxes".
I wonder how this will affect Amazon's business, and I hope it is disclosed on the site prior to purchase that tax will be charged. I am a California Amazon shopper who spends hundreds of dollars a month there, and I am enticed to do so by Amazon Prime and no sales tax. It is very rare that I am willing to pay sales tax online - it has to be on a must-have item. The majority of items I buy do not fit that label. I don't have to buy them at all, and wouldn't be buying them at a brick and mortar store if there were no tax-free shopping. For me, personally, Amazon charging sales tax will save me money - because I absolutely will not pay it for anything that isn't critical to have.