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)."

Comments

Duh

[Desler]

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.

Re:Duh

[ShanghaiBill]

Of course Amazon did this to hurt it's competition.

Of course, but that doesn't make them wrong. Taxes should be fair. If I buy something, the tax on it shouldn't depend on who I bought it from, or where they are located. Capitalism works best when companies compete to deliver value to their customers, rather than competing to avoid taxes.

Re:Duh

[fl!ptop]

Taxes should be fair. If I buy something, the tax on it shouldn't depend on who I bought it from, or where they are located.

How do you define "fair?" Is it fair, for example, that I can drive across my state line and buy groceries and clothes and pay no sales tax? Shouldn't my state be allowed to compete by lowering or eliminating their own sales taxes?

Gasoline tax is also lower in my neighboring state, and I buy gas there whenever I can. Most of my driving is in my own state, causing wear-and-tear on the roads that's not being paid for by my gas tax. Is that unfair?

Avoiding taxes is one factor companies consider when deciding to locate somewhere. It's also a tool states can use when competing with each other to lure businesses to locate there. That seems pretty fair to me.

For the record

[Anonymous Coward]

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.

Re:For the record

[iamhassi]

They don't support having to figure out 10,000 taxing jurisdictions each with their own weird rules.

This x9000.

Back in the day I worked with a company that provided a very popular ecommerce shopping cart that online shops could use to easily peddle their goods online. I remember when they rolled out the ability to charge sales tax and OMG the nightmare it created for support. Because remember, it's not just the State sales tax, often individual cities and counties charge a tax, AND on top of that tax different items can be taxed at different rates, like alcohol and certain foods. We had a company that would automatically update the database of taxes for everywhere and we allowed the stores to put in their own rates but it didn't stop them from calling non-stop complaining that some places were too low or too high and they didn't want to figure out the rate themselves and blah blah blah

Re:For the record

[margeman2k3]

You think that's bad?
I worked at a cafe in Ontario, and we had so many tax rules that the company writing our POS software couldn't even get it to work properly.

It looked something like this:
Non-food items are charged 13% tax
Some non-food items are charged 5% tax
Most food items are charged 13% tax
Some food items are charged 5% tax
Other food items are tax free
If you spent less than $4 on certain food items, it was tax free
If you were buying "bakery" items (bagels, etc), then they were tax free if you were buying at least 6, but the total had to be under $4, and you couldn't buy a drink with it.

And this was just for a coffee shop.
I can see why Amazon would be willing to charge X% nationally, as long as they don't need to deal with crap like that.

Re:For the record

[colinnwn]

It just doesn't work this way. First tax jurisdictions aren't divided by zipcode as you allude to. You remit taxes to the state, county, city, and special taxing jurisdiction. As I recall there are 40,000 different "jurisdictions" in the US that can collect tax, but hundreds of thousands of different combinations of those overlapping jurisdictions. Some states will distribute the funds for you as long as you submit a report of what amounts should go where, other states the individual jurisdictions collect their own tax. In addition each of these jurisdictions have hundreds or thousands of tax laws or private letter decisions on how their code should be interpreted.

Now if you are saying our tax code should be set up the way you suggest, then I agree. But right now it is not set up in any manner where you can do that.

In praise of New Hampshire

[Okian Warrior]

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 Ridiculous

[Anonymous Coward]

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?

Re:Just Hateful

[Runaway1956]

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.