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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
You can't give away sales tax in this manner.
If Amazon were decent about it, they'd refund it to the customers.
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
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.
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.
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?
Almost all states allow the retailer to keep a portion of the sales tax collected to cover the cost of calculating and remitting it to the state. Your local Walmart gets this deal, too, as does your local family owned business. Of course, it made more sense prior to computers when it was a manual process to tally up all of the sales calculate the taxes prepare the statements and remit them to the state than it does today. But that would be a different argument.
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.
all the sales tax earmarked for local government operations will go to those two cities
They're giving Amazon the money that would go to the city. Not all of the state's tax.
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.
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.
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.'"
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