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Why Amazon Fights State Sales Tax, But Supports It Nationally
cagraham writes "The Wall Street Journal reported this morning that Amazon will begin charging customers in Connecticut, Massachusetts, and Wisconsin sales tax today, after fighting against it for years. Amazon now charges sales tax in 16 states, affecting roughly 163 million Americans. Yet despite Amazon's continued fight against sales tax on the state-level, they support a Senate bill that would allow all states to tax online retailers. It seems like a contradiction, but it's actually a calculated move to undercut rivals like eBay (who would have a far harder time dealing with sales tax laws), and even an unequal playing field (many states that tax Amazon don't tax other online retailers)."
Is anyone actually surprised about this? Of course Amazon did this to hurt it's competition. It's also why they sell books at far below other places. It's not because they care about you, it's because they want to drive out everyone else.
Amazon has supported a national sales tax since the late 90s. Their position hasn't changed, just people's false memories.
They don't support having to figure out 10,000 taxing jurisdictions each with their own weird rules. And there is no justification for Amazon to collect sales tax below the state level anyway, unless they are shipping to a state where they have a presence or nexus.
The supreme court has already ruled on this in 1992, and their ruling was quite clear. So either Congress gets off their butts and passes a law, or Amazon can just keep fighting it out in district courts for years.
That does not absolve people from paying use tax, which most don't. But use tax was never meant for consumers, and states have little power to enforce it on anyone except businesses. So a national sales tax makes the most sense in this case, which is why Amazon supports it.
There are other places to get stuff from where you don't have to pay the California extortion. B&H, J&R to name 2 off the top of my head. I'd rather my money go to UPS and FED-Ex than the bozos in Sacramento.
Yet another reason to live in New Hampshire: No sales tax.
Liberty in your lifetime
Merchants collect sales taxes, the government charges the taxes.
And the tax is really on the buyer in most states; that way the tax isn't a cost of doing business.
Article X: The powers not delegated... by the Constitution...are reserved...to the people
A few more decades like this, and you won't be able to tell this nation ever had flesh-and-blood inhabitants just from looking at our statutes and caselaw!
Doesn't change the fact that sales tax is regressive. Once again the 1% fucks the everyman. When's it gonna be our time to violently ass rape Mr. Monopoly?
Well, it's not entirely regressive. A low income person will spend a higher portion of his income on food and housing than a higher income person -- things that are generally exempt from state tax. The higher income person will be eating out more, buying more "toys", buying an expensive car, etc and generally making more purchases that are not exempt from tax.
Heh, that's actually a pretty good metaphor for it, "corporations terraforming or legal system", I like it. I mean, I hate that it's happening, but that's a great way of putting it.
I remember sigs. Oh, a simpler time!
Yet another reason to live in New Hampshire: No sales tax.
In further praise of New Hampshire note that we also don't have an income tax and, unlike California, we're not bankrupt. Also, the unemployment rate is pretty low - currently 5%.
(We have high property taxes, but one of the lowest overall tax burdens, so having high property taxes isn't as important as you might think.)
This is something that a lot of people forget. The amount of money you spend on sales tax is often largely optional. Most necessities like groceries don't have sales tax in most areas. I actually find that sales taxes affect me very little, even though my sales tax rate is 13% (Go Canada), as I tend not to actually buy that much stuff.
Anthropic principle: We see the universe the way it is because if it were different we would not be here to see it.
Amazon fights local sales tax because they don't like the notion that any municipality with 3 pigs and a mayor can impose their own laws on Amazon despite Amazon having no physical presence there. If you were running a website, would you want to care about every law that some nut job five states over dreams up?
And why is a regressive tax bad? People love to complain about regressive taxes, but the argument why they're bad always falls back to "because its bad!". I find that opponents of regressive taxes always prefer progressive taxes, as if that's somehow better. Why?
Because it puts an excessive burden on the poor, who are least able to afford it. The assumption is that the rich got rich from the work of the poor. Which is probably not so true today as it was when we had a more industrial economy.
Now the rich get rich in increasingly complex financial schemes to extract more and more money from the underprivileged. I don't think it's sustainable in the long term - the 1% has an enormous portion of the wealth in this country, and the class of poor is expanding as the middle class contracts. As more and more of the poor are unable to support themselves, someone's got to pay for them, and the rich carefully protect their riches to make sure it's not them. So who is left to pay taxes when the poor are too poor to pay taxes, the middle class is virtually non-existent, and the wealthy have made sure that they pay very little?
The problem in the USA isn't that there are too many poor people, it's that there are too few wealthy people - locking up the wealth in a tiny class of super rich does not make for a healthy economy.
Shouldn't sales tax be based on the seller's location, not the buyer's? That would certainly simplify the collection issue, since as a seller you would only have to comply with one set of laws.
When I travel to another state and buy something there, I pay sales tax to their state government, not to mine. Why is it different online?
A low income person will spend a higher portion of his income on food and housing than a higher income person -- things that are generally exempt from state tax. The higher income person will be eating out more, buying more "toys", buying an expensive car, etc and generally making more purchases that are not exempt from tax.
In the worst states the poor pay 7% of their income in sales/excise taxes vs 4.6% for middle incomes and 0.9% for the wealthiest. from ITEP:
States’ consumption tax structures are highly regressive with an average 7 percent rate for the poor, a 4.6 percent rate for middle incomes, and a 0.9 percent rate for the wealthiest taxpayers. Because food is one of the largest expenses for a low-income family, taxing food is a particularly regressive tax policy; five of the ten most regressive states tax food at the state or local level. Excise taxes on things like gasoline, cigarettes or beer take about 1.6 percent of the income of the poorest families, 0.8 percent from middle income families and 0.1 percent of income from the most well-off.
http://www.itep.org/pdf/whopayses.pdf
Because it puts an excessive burden on the poor, who are least able to afford it.
So which is better: adjusting the tax rate, or subsidizing the poor?
Adjusting the tax rate is communism: it relies on the perfect wisdom and incorruptibility of the ruling class to set the right rates. It's subject to personal bias, extrapolation from incomplete knowledge, and outright malfeasance.
It's also an indirect solution, which leads many people (myself included) to suspect ulterior motives. If your purpose is to help the poor, then why adjust the tax rate? A better solution is to identify and subsidize the poor through grants: food coupons, rent assistance, and so on.
The targeted solution is straightforward, and lends itself to measurable goals with oversight and efficiency. For example, legislators can define a measure for poverty and the amount of assistance warranted. The effects can be measured from case studies and adjusted as needed. Specific requirements (food, medicine, particular circumstances) can be directly addressed with specific remedies.
Changing the tax rate allows no such insight or specificity. You might infer general trends from population studies, but it's not as efficient or immediate or specific as a targeted approach.
Identify your goals and implement a direct solution which can be measured. It's the best way.
Flat tax is better for the poor.
Ill gotten gains?
Pal, I don't like paying taxes any more than the next guy. But, county, city, and state governments do require money to operate. Your county almost certainly has roads to maintain. Someone has to pay for it. Your schools cost money. Everything costs. So, how are you going to pay for it?
Each state has different formulas for funding things at the local level. Maybe your state doesn't use any sales tax for education, but the next state over uses most of sales tax for education. So, I can't know where YOUR sales taxes went 30 years ago, or today.
But, the fact is, 30 years ago, almost everything sold at retail WAS TAXED. The county and the state both had a sales tax, and they got their cut on just about everything. With today's internet, both are simply cut out of about half (or more) of their revenues.
Do I WANT to pay my county a few cents every time I make an online purchase? Not really. But, I do need my roads. I like having the parks cleaned up and maintained. And, the kids need stuff at school. Horatio has been wanting to do some much-needed work at the Horatio High School's football field. The money has to come from SOMEWHERE.
What I do NOT LIKE, is the fact that local and state governments have become more reliant on federal funds for everything, from school funds, to highway funds, to local infrastructure improvements. Local governments should be independent of Washington's money. Sales tax was a large part of that financial independence.
"Windows is like the faint smell of piss in a subway: it's there, and there's nothing you can do about it." - Charlie Br
Another big problem with all the different taxes is that you have to remit them all separately as well. If the states were organized well enough to be able to collect all the taxes for all the various organizations in the state, I guess that isn't horrible only 50 places to pay it to. However let's be realistic you are going to need to end up remitting taxes to individual counties and cities as well and that becomes a complete nightmare. You not only need to know how much tax to collect at each level, you need to know where it goes and then to make those payments and it isn't as though you get to do it just once, or even once per year.
It's just a nightmare on every level.
Have any of you attempted to build a professional shopping cart and tried to get accurate sales tax working for states like California, Texas, and New York?
It's amazing how costly it can be because there's no easy way to map zip codes or any other easily looked up value to a tax rate. Zip codes can cross county lines and if a mall is built on a county line, there could be different sales tax rates within the same building. And yet, the states are no help in helping online stores to easily comply with the varying sales tax rates, even though they stand to make more money if people can more easily comply.
Even Paypal, Amazon Payments, Google, and other payment providers will not calculate sales tax for you, likely because it's so easy to get it wrong- The liability of miscalculating sales tax must be huge- Amazon has the money to fight the state tax offices but not a mom and pop online store.
There are several companies that exist solely to help shopping cart builders comply with the sales tax burdens of the different states, but the fees for using paid APIs can be high. One of these companies has map illustrating the problem.
Comment removed based on user account deletion
I never bought anything from Amazon, simply because they want to charge me the additional 27% VAT of my own country, while on the Internet they should charge none and I'd pay it at the customs when it arrives. If I paid them, would they return the tax money to our government later? I don't think so.
Yes, they would turn the tax money over to your government.
I chose the term "communism" on purpose because that's how the MSM sways groupthink - by linking things to hated concepts so that people will reject an idea out of habit without thinking. I'm experimenting with message delivery. Like you say, people equate communism with socialism, and I was trying for a knee-jerk reaction. (Your post wasn't one, BTW.)
I'm actually *for* helping the poor, and to a greater extent than we currently do. More than mainstream democrats, I think. I'm a big fan of doing it more effectively, though.
I'm not on the side of conservatives or liberals, mostly I'm on the side of insight. If this seems anti-liberal, that's only because they are in power ATM and government is a hive of incompetence. I was against the previous conservative government as well.
To sway public opinion, we should learn from the techniques that others use. That's my current focus.
(P.S. - Nice likeable reply. Kudos.)
(many states that tax Amazon don't tax other online retailers).
This seems quite unfair. Should definitely be fixed. I call BS on a state that taxes Amazon ONLY and leaves everyone else alone. That's plainly unfair, surprised they can get away with that.
Didn't think you could pass laws to tax specific business entities. Learn something new every day!
Got that backwards pal. There should be no INCOME tax anywhere and federal sales tax everywhere, on everything. Income taxes are so grossly unfair.
not really to hurt competition.
but a level playing field.. so others wouldn't tax the sales tax.
it's ridiculous how easy dodging the sales tax in usa has been. "oh but we're selling online!" yeah...
world was created 5 seconds before this post as it is.
I look at this like I look at Warren Buffett talking about incoming tax. When a rich company or person starts saying "Hey, hey I'm not being taxed enough. Why aren't you taxing me? I really need to be taxed more!" they have some scheme planned. They didn't get that way by paying more tax than they had to. (But hey, I'm completely cynical.)
Did you know 80 to 90% of the moderators on slashdot wouldn't recognize a troll even if one dragged them under a bridge.
Yes, govt needs taxes, but why does my state need so much more tax than all the states around it? Why does my state need to tax a purchase I'm making in another state?
The taxes on the gas are supposed to pay for the roads. The property taxes are supposed to pay for the schools and town govt. A sales is acceptable because someone is doing business within the state. A sales tax on an out of state purchase is the state trying to punish you for going somewhere else to save a few bucks because they don't want to lower the taxes to be competitive with the other states.
You still don't seem to connect all the dots. Large retail corporations have cut small retailers out, and at the same time, cut out local governments. Once upon a time, within living memory, the vast majority of people bought 99% of their goods locally. To get cheaper goods, or to benefit from lower tax rates, you had to actually drive across state lines. Yes - we did that. A lot of things in my home state were taxed, but 20 miles across the state line, some of those things were tax free, or taxed at a lower rate. So - from time to time, the family would load up, and we would make an expedition across the state line.
The problem today is, those huge megacorporations are basically depriving YOUR county, MY county, and EVERYONE's counties of much needed taxes.
If you're one who believes that you shouldn't have to pay taxes at all - I have very limited sympathy for you. I've already stated that I don't LIKE paying taxes - but pay taxes we must.
Oh - fuel taxes? Those go to state highways, for the most part. Your local government doesn't get a cut out of that. The feds have an excise tax on road use fuels, and the state has their taxes. No local government that I'm aware of gets ANYTHING from those taxes. So - how does your city pay for it's city streets? Your county or parish? You need to check that out. In MY county, they use part of sales taxes, part of property taxes, a portion of fines and penalties collected by the courts, and any federal or state grants that they can get their hands on.
"Windows is like the faint smell of piss in a subway: it's there, and there's nothing you can do about it." - Charlie Br
I agree. The company I work for is benefitting from an arrangement with the city and county government. I don't like it at all. Cheating rat bastards, take the money, and laugh all the way to the bank. But - it's not like I have a voice in the matter. The mayor, the county judges, and my bosses all gain something - we, the average taxpayers get nothing.
Pressure? You may have guessed that I am an outspoken person. I put all the pressure that I can on everyone involved. But, one loudmouthed old man doesn't generate much interest.
"Windows is like the faint smell of piss in a subway: it's there, and there's nothing you can do about it." - Charlie Br
So - how does your city pay for it's city streets?
The property taxes are supposed to pay for the schools and town govt. That would go towards city streets.
If you're one who believes that you shouldn't have to pay taxes at all
A sales [tax] is acceptable because someone is doing business within the state. This would also apply on the county level.
The problem today is, those huge megacorporations are basically depriving YOUR county, MY county, and EVERYONE's counties of much needed taxes.
If they're not operating in my state or county, then my state or county isn't entitled to to their taxes. If I go on vacation in another state and shop at a store there, should I pay sales tax in my home state? How is that different from ordering something online from another state?
I used to live in Rockland County, NY. Rockland has some of the highest taxes in the state and is also running a >$125 million deficit. Trying to grasp at more taxes isn't the solution. State and local govt's need to balance their budgets. I don't see why taxing the average citizen more is acceptable to make up for their incompetence.
Local taxes need to charged as well. Why should the residents of Chicago with its 10.something percent sales tax get a free ride? I say screw them to the wall too.
Maybe now cities will start switching from sales taxes to property taxes. Property taxes "encourage cities to make land-use decisions that bolster property values...Sales tax just incentivizes you to put up big-box stores."
I'd rather see my house value go up than see more Wal-Marts. Wouldn't you?
Any sufficiently unpopular but cohesive argument is indistinguishable from trolling.
Because I may be a bit paranoid but I still don't trust that they've "seen the light".
Did you know 80 to 90% of the moderators on slashdot wouldn't recognize a troll even if one dragged them under a bridge.
This is pretty much how my current home town works. What it leads to though, is around 50,000 property owners financing everything in the city - roads, schools, parks, leisure centers, social programs, libraries, etc. You may think that sounds fair enough, but we get over 2 million tourists a year, who outside of a 9.8% room tax, pay nothing towards the infrastructure they use during their vacation.
The modern notion of a middle class is a complete aberration, and a bit of a misnomer. The middle class has only really existed since the mid 1900s, and previously no society has ever had one. The American and European middle class only came into existence because of our society's ability to extract wealth from other countries.
The American middle class is in fact part of the global 1%. As America's ability to control foreign economies and resources decreases, the lower echelons of the global 1% who live in America may experience some slight discomfort.
Moar Roads?
Heaven forbid they build more and better roads for the delivery truck to travel on. Or do you think stuff you order just materalizes on your front porch?