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My impression (as a failed American businessperson who aimed for full legal compliance) is that successful businesspeople (at least in America) tend to accept that full legal compliance is impossible and instead worry only about the risk of noncompliance.

As such, I think the much more common approach is to ignore even the clear local requirements until there is a demonstrated downside to doing so. Proactively worrying about compliance on the edge cases where no one is currently losing expensive losing lawsuits is viewed as somewhere between insane and suicidal.

Are you perhaps from a more traditional country (or part of the US) where obeying the law still has a strong moral component?

> successful businesspeople (at least in America) tend to accept that full legal compliance is impossible and instead worry only about the risk of noncompliance

That's because it's cheaper to settle than to be compliant as a result of prosecutors willing to settle for a fraction of what would otherwise be due, but avoiding a long trial.

If government is not involved businesses often settle for more than would otherwise be due, to avoid a long and costly trial. Curious..

Anyway, in most civilised world the opposite is true. Non-compliance can be VERY costly.

Going back to your question: I've run my first businesses in EU and I still have EU mindset. I'd rather have the piece of mind knowing that I'm compliant.

And as much as it's going to sound weird in the light of Apple tax "optimisation" I can afford to pay my taxes, even if I don't live in US and don't benefit from them in any way and know most of them are going to be wasted.

That's because it's cheaper to settle than to be compliant as a result of prosecutors willing to settle for a fraction of what would otherwise be due

That's likely true, although I think the dominant factor is probably the laxity of enforcement. That is, even if the penalties far exceeded the cost of compliance, if your chances of being caught are small enough, the economics (if not the morality) favor noncompliance. There is also the problem that attempting to be compliant can call attention to your noncompliance, thus perversely increasing that chances that you will be penalized.

Anyway, in most civilised world the opposite is true. Non-compliance can be VERY costly.

In my mind what is worse about the current US system is that once one accepts the existence of contradictory regulatory regimes combined with lax selective enforcement, most of leverage that would keep the system sane is lost. If the penalties are severe and regularly enforced, there is a much stronger feedback to make full compliance efficient, or at least possible.

I'd rather have the piece of mind knowing that I'm compliant.

While it may provide peace of mind, realize that there is almost no way to know all the rules, and you are almost definitely noncompliant with regard to some of those you do not know. There are likely agencies that believe they have jurisdiction over you that you've never even heard of.

In my case of running a vegan frozen dessert business in California, while my research had revealed that the California Dairy Board reserved the right to regulate non-dairy frozen desserts (under the theory that a consumer might be confused into thinking that they were a dairy product) I was surprised when the federal Food and Drug Administration found me noncompliant for failing to properly register under the theory that since we had purchased some of our ingredients from another state (cocoa powder) we were engaged in interstate commerce and thus subject to their regulatory burden. While we ended up not paying any fines, and while the agents involved were polite and respectful, there were several painful days wasted on record searches and interviews with all of our key employees.

>> I'd rather have the piece of mind knowing that I'm compliant.

Well that's the problem, in my opinion. I tend to try very hard to ensure I'm compliant: I read contracts before signing them, etc. Increasingly I have no idea if I'm compliant because the contents of contracts and laws seem arbitrary and vague to me, and you have to be the person who will decide or be the lawyer who works with them to have any sense of if you're compliant or not. There's no 1 checklist you can go to to make sure you're complying with laws from multiple branches of multiple layers of government.

There are some really insane and conflicting local, state and federal laws in the US when it comes to running a business and especially if it's retail. It's easier to ignore for most small and medium business until there's an audit. Personally, I find the whole sales tax situation to be borderline insane. I understand the need for local governments to have a revenue source - I totally do. However, it would make it easier for businesses to comply and local governments to maximise tax collection if they simply all get together and have one collection agency at the federal level which then splits the revenue according to place of sale and sends it back.

Canada has a Harmonized Sales Tax which covers both provincial and federal taxes, it works wonders and saves hundreds of millions of dollars a year in useless bureaucracy. Canada supports this suggestion. ;)

You have the risk that such revenue is divided unevenly based on other criteria. Taxes should be ideally local: being global makes it easier for low tax revenue places get money from high tax revenue areas.

Not to mention that competition lowers taxes for sure.

By contrast Australia has GST (goods and services tax - 10% universal sales tax on almost everything except a few “essentials” exceptions like fresh food, some basic utilities? But is generally only paid by consumers - businesses claim back the GST that they pay ) which is collected federally. And all our tax is handled by one federal agency.

Generally speaking all prices listed are GST inclusive at least for consumers and store fronts. You pay what the price sticker says.

Where it breaks down for us is that GST revenue is split on a determined percentage per state that is unrelated to where it’s collected. There is some sense to that but it also causes problems as there is a strong imbalance which is argued about.

On a related note we do have a 5% payroll tax on all salaries in businesses paying over some figure I think $2m/year. This apparently goes to the relevant state and is one of our little inconsistencies left compared to what is on the whole quite a good federally administered system by one agency. One tax return. One tax rate.

> successful businesspeople (at least in America) tend to accept that full legal compliance is impossible

This REALLY depends on the level of law. Local rules? Maybe. State or federal laws? Playing with fire. Case in point: Lyft, Uber et al versus Zenefits.

Disclaimer: I am not a lawyer. This is not legal advice. Do not break laws.

It depends on the law. There's a big difference between a specific niche business not complying with some ambiguous, contradictory tax laws and Uber which bases their entire business model around cost savings from skirting a handful of labor laws that basically every business must be conscious of and skirting local regulations on taxi services but entrenching itself too deeply before enforcement can kick them out.

Seriously - the revenue can come and audit me if they think I'm in the wrong, and I'll happily pay the costs of coming into compliance if they can demonstrate why those costs need paying.

Otherwise? Screw it, I'll just do the best I can with either a scattered brain and handful of receipts, or a few hours of a desultory tax attorney's time.

If you want better, make the rules simpler. I don't have the money or time to deal with this byzantine bullshit properly, and the tax collectors not going to convince me that it's worth my time to do proactively with any argument short of a gun.

Even hiring a remote team is incredibly difficult. Want to hire someone in a new city? OK, register with the secretary of state, complete the business licensing, depending on state you may need a registered agent for the area they live in, and your tax paperwork will be there in 21 days. Hope they don't need payroll until then!

Use a PEO, bam, done!

Tax avoidance is a felony.. so there is that.

Sorry to be pedantic, but tax avoidance is completely legal and encouraged. Tax evasion is illegal.

In the former, you make legal financial decisions that minimize your tax burden, in the latter, you illegally hide your wealth. It's not always black and white, but the distinction is important.

http://www.nouse.co.uk/2013/01/22/what-is-the-difference-bet...

Is there a possibility for a private company to help business in compliance for a very small fee? Some kind of startup?

Perhaps it's more accurate to say that most successful businesspeople realize full compliance is impossible, and go for the 80/20 rule: 20% of the effort to get 80% compliance. At that point the IRS will go after people who are more obviously 0% compliant.

That is an excellent summary and why the solution should be Federal law and not a State law. The EU model would work well in that case.

However, the actors (States) aren't exactly operating in a reasonable way. What I speculate is the case is that people who you can obligate to pay taxes and yet cannot vote on those taxes make the best targets. Taxation without representation has been a sore spot for quite a long time :-).

The key here is the business license. By requiring it, the State, County, and City all get a bite at the Apple and can add their own level of tithe to the requirements. Whether it is that you meet their ADA requirements, their street address requirements, or their officer disclosure requirements, all things to generate revenue from "business" which when that business is out of state become exceptionally burdensome.

Again, the only solution I can see is a Federal law that can supercede any local law when the subject party is not a resident in the same jurisdiction. But they states will lobby very hard against that happening.

Amazon and the third party sellers aren’t being taxed. The consumers are.

Amazon could setup a big warehouse complex in South Dakota or something and avoid this problem — but they want to benefit from local distribution.

No, the businesses are taxed, and they pass the cost to the consumer. The "sales tax" itemization the end of the receipt is for informational purposes only.

They are collecting a sales tax on behalf of the taxing government from the buyer and are then legally required to pass that money on. Of course, money is fungible so the revenue including sales tax goes into the big bucket and then money has to be taken out of that bucket to pay the tax. But in principle, they're just taking in money and passing it through.

It's a sales tax, not a 'buying' tax. Say, a company sells you a $100 item for $100, forgetting to include the tax in the final price. And say no one ended up paying tax for that transaction for in that tax year. Who is the government going to go after once they realize this to collect the $8.75 sales tax - you or the company?

Edit: I think you are confusing it with income tax. What you are saying happens for salaried income in USA.

Exactly this. It is a tax on a business based on their sales, and it is demanded whether or not the consumer pays it as a separate line item or not.

That said, it is a common misunderstanding, and it is made more so by companies that advertise "and we'll pay the sales tax!" They are always paying the sales tax, just most times they pass that cost along to the consumer.

They are always paying the sales tax, just most times they pass that cost along to the consumer.

While you are technically correct that this is how "sales tax" works, it's worth keeping in mind that in most states "sales tax" is mirrored by "use tax", and that these two "mutually exclusively" apply to the same purchases.

That is, if the seller is subject to the laws of a state they are generally required to obtain a "seller's permit" and to pay the sales tax, and are liable if this tax is not paid. But if a resident of that state purchases from someone who is not under that jurisdiction, the buyer then legally required to pay the same amount as a "use tax", and assumes the same liability. For California, see Question 1 here on "What is the difference between sales tax and use tax?": https://www.boe.ca.gov/sutax/faqtaxrate.htm#1

Which leads me to ask: for those of you in this thread saying "sales tax is not a buying tax", are you aware of the existence of this "use tax" and making a subtle semantic point that accidentally encourages illegal behavior, or are you unaware that of the interplay between the two? If previously unaware (and assuming you've ever purchased an item in a situation where sales tax was not charged), are you likely to change your behavior and self-report, or do plan to knowingly continue to engage in tax fraud?

(For the record, I do not self-report, although I do feel guilt about it.)

Yes, the first attempt by the states to get around the lack of interstate taxes, the imposition of a mirror tax on the party that was inside the state.

The presumption is that you, as (say) a local retailer, collected sales tax on what you sold because you have a legal requirement to do so. Doesn't matter if you split it out or not, you effectively collected sales tax one way or the other because state law says you had to. If, in your mind, you didn't collect any sales tax, too bad because you had to. You don't have the option to tell the customer "Hey, we're not going to collect sales tax. Please send it in yourself."

If you weren't required to collect sales tax, it is actually the customer who is on the hook to remit it. Of course, there's often no way to enforce this.

>Edit: I think you are confusing it with income tax. What you are saying happens for salaried income in USA.

Sort of but not really. Employers collect an estimated income tax liability based on your salary and what you've put on your W-4. The individual is still responsible for paying the right taxes and may be subject to penalties and having to make future quarterly tax payments if those withholdings are too low.

ADDED: The difference is the the government (in general) knows your taxable income and it's up to you to make the appropriate payments. In the case of sales tax/use tax, the government (thankfully) doesn't have the detailed and personal information to determine liability at the individual level so they have sellers do the up-front collection as much as possible.

No, it’s a sales and use tax. Merchants are required to maintain a license to collect and remit timely payments.

If you spend a significant amount of money on something like a car that requires registration or regularly buy other goods in high dollar quantities in Delaware or New Hampshire that you enjoy at home in Pennsylvania, New York, Massachusetts, the tax man will notice and eventually show up to collect.

Sales taxes are usually kept in segregated, designated accounts and are swept weekly to the taxing authority.

Some merchants bury that cost in the sales price, but generally speaking it’s a seperate line item that is treated differently. Merchants comingle those funds at their peril.

The consumers are taxed but if you have nexus and don't collect the tax then the business becomes fully liable for the uncollected tax.

What I don't understand is why you need to have a local presence to be affected at sales tax.

Why on earth should selling goods from Oregon in Seattle not be subject to Washington sales tax, but selling goods from Seattle to Seattle be subject to it? This punishes local businesses, and encourages tax arbitrage.

As far as I see it, if you sell to residents of Washington, you have a presence in Washington.

In Washington, you're supposed to pay use tax on any untaxed item brought into the state. I don't know anyone who does though.

I wouldn't even know how

They are subject to tax.

You're supposed to pay "use tax" for things you buy from outside of your tax jurisdiction and didn't pay sales tax on. That's absolutely everything, technically.

For my state you're supposed to report all your out of state purchases on your income tax return.

The reason is because a given jurisdiction has no power to tax a business in another jurisdiction. They can tax you though,you are in their jurisdiction.

Washington can't force a company located outside of WA to pay taxes.

If they are selling goods inside WA, surely they are located in WA. I mean, I can claim to be located on the moon for all good it does me, but if I do business in WA, surely I have a presence there, and that business must comply with WA laws.

Unless an interstate agreement is in place, Washington has no business telling Oregonians what to do.

The local nexus concept is that once you have a presence in the state, you’re obliged to follow the laws of that state.

I live in New York. If I ship FBA inventory to my agent (Amazon) in a California warehouse, California wants me to follow their law. Makes sense, and is easily avoided by not using Amazon FBA.

Amazon plays it both ways. They get to avoid collecting sales tax by claiming to be just a fulfillment house, but they market in such a way that it is difficult to buy from them. In the process of making that argument, they push that legal liability to the smaller entities who use their site. Amazon is the asshole here.

>As far as I see it, if you sell to residents of Washington, you have a presence in Washington.

The Supreme Court disagrees.

The buyer still owes use tax if their state requires it. But the out-of-state seller with no nexus in the state has no obligation to collect that tax or provide information under most circumstances to the state in which the purchase was made.

Because Article 1, Section 8, Clause 3 is the Commerce Clause and it states that only congress is allowed to regulate interstate commerce.

Do you really want to have trade wars between Washington and Oregon? Oregon tariff/taxes the fuck out of software and Washington responds by tariffing the fuck out of whatever Oregon makes a lot of? (probably weird shit, I've been to Portland once).

> Taxation without representation has been a sore spot for quite a long time :-).

For non-American readers: this is why the USA declared independence from Britain.

The clusterfuck is Amazon, who clearly has the ability to collect taxes on FBA product.

They fought unsuccessfully to resist their own tax obligations, and pushed liability for tax, counterfeit product, and other issues to an army of third parties. They get to benefit by pushing phoney “third party sales” that they fulfill to avoid customers paying tax.

Collecting the taxes from a seller perspective is a solved problem - 10 minutes of Amazon account setup.

Knowing if you have to collect those taxes, remitting them according to 50 sets of rules, often contradictory.. is a whole different story

It's way more than 50 sets of rules considering in some states (like NY) every single municipality has the ability to levy sales tax and those taxes can get complicated. For example, in some counties in NY county sales tax is charged on clothes and some counties it isn't but state tax is always charged on clothes.

The rules are always changing too.

I work in sales tax law and my theory is that the states will agree that it does not create nexus because the seller is not DELIBERATELY deciding where the product is being stored. In other words, it is impossible for the seller to even know which state they have nexus with.

Amazon provide reporting which allows you to work out which states you have stock in. It is by no means straightforward but certainly can be done.

My understanding is FBA inventory is fungible, so how would that work when Amazon fulfills an order from inventory that another seller warehoused?

As I understand it California for example would claim you have a nexus once any stock at all has been moved into an Amazon warehouse in their state. In that case all you would need to see is that Amazon has moved some of your stock into CA and then you would have a nexus and owe sales tax on any sales to customers in CA that your business does, regardless of where that stock comes from.

To clear yourself of this nexus requirement for CA you would need to have had no stock stored there for a 6 month period.

Obviously whether Amazon internally transporting one unit of your stock to CA for a few days constitutes a "substantial presence" is an untested legal question.

This is a really good write up of the problem.

For me the issue isn't even about having to charge the consumer tax as a marketplace seller that uses FBA. It's the logistical overhead of registering, tracking, and paying sales tax 40+ different ways 4x per year. This essentially makes it impossible for smaller sellers to compete.

These issues of keeping track of stuff seem utterly trivial compared to what Amazon already does. I fail to see why this is a problem. I also fail to see why requiring businesses to follow the law is a bad thing. If it's too difficult, then talk to the legislators, don't just ignore the rules and regulations in place.

The reason they complain so much is because it just ads extra cost to them because of audits.

Imagine having to hold a seller's license in every state just to sell on eBay. A lot of people who sell on Amazon are also just 1 person businesses. It's a lot of extra paperwork, time, and cost for one person.

Even with 50 people it would still be a significant burden

Sounds like there is a Commerce Clause case to be made in there somewhere?

There has always been. It hinges on the whether the business has a nexus by storing product in an Amazon warehouse. The problem is:

a) States really really hate that part of the Constitution, and verdict in Quill Corp. v. North Dakota, which led to the inability of states to collect tax across state lines. Up to the point of passings laws that directly contradict that Supreme Court verdict. So you're going to get sued, it's just a matter of how long it takes to make its way through the courts. b) They piss off enough states, the state governments complain to their Senators and Representatives, and suddenly we have an arm of the IRS federally given the power to collect state sales tax. Which means the IRS gets to know everything you bought online.

Amazon agreed to collect taxes to mollify the states, so they wouldn't start the above two options. It's a giant company, so it can take the hit of compliance. It also puts them at a competitive advantage over smaller retailers. Their margin is Amazon's opportunity after all!

If they get forced, I suspect Amazon might even get into the business of determining sales tax required for third parties, on that county by county basis. Make it an API, price it by the lookup, more business for them. Call it Compliance as a Service (CaaS).

And presumably work out some deal where they can transparently remit the sales tax on behalf of the sellers. That's probably the bigger deal than determining the amount which I imagine Amazon could do pretty easily.

In terms of what they sell themselves, they were well on their way to having a presence in every state anyway between warehouses, Amazon locker, etc. So they pretty much rolled on something that was going to be a moot point in a few years anyway.

Maybe states and localities need to put the onus on citizens. Legislate at the federal level for reporting sales to some central agency (similar to how employers report salaries to the IRS; perhaps limiting the reports to categories of items and total amount per period [month, quarter, year, w/e]), states query the database and issue a report to each citizen to accompany their state income tax filings.

Add any unpaid sales & use amounts to the income tax bill.

>Maybe states and localities need to put the onus on citizens.

They do. At least in most states buyers are supposed to pay use taxes on purchases.

>some central agency

Sorry, but that's an absolutely awful idea. I do NOT want all my purchases reported to some federal agency.

Don't worry, surely the government will save us.

- Create a new class of business licence that is valid for entire country for sales outside of a brick and mortar store - online/phone/carrier pigeon.

- Have sellers collect tax as if they had nexus in every state in US - it's horrible with thousands of different rates, but at least it's a solved problem. Removes Amazon advantage of shipping across state lines to avoid sales tax.

- Have sellers file a single tax return with a per-state breakdown.

This is a pretty good argument for VAT over sales tax.

Possible solutions (speaking about the US of course):

1. Let the federal government establish a uniform national sales tax and outlaw all state and local sales taxes.

2. Even better, eliminate sales taxes entirely. Replace it with higher income taxes or property taxes. Yes, yes, I know, regressive, not progressive, taxing consumption is better, but there's something to be said about an economy without crazy levels of bureaucracy and regulations.

3. Just keep fighting off the states until they accept that Internet orders should be non-taxable. The Internet has completely changed the business models of music delivery, porn, and newspapers. No reason it can't eventually convince states to back off on sales taxes.

Something tells me "brick and mortar" won't be big fans of option 3.

Property taxes are fairly progressive, from where I sit. Richer people have more assets and would pay more taxes.

Except there is no accounting for income. So if I'm poor, or become poor, I still have to pay the assesed property tax on any property I own. I may be forced to sell the property as a result.

Property tax works against poor people being able to own property or keep property they own.

This is why elderly people who may own their homes free and clear can still be forced out of them when they retire or become disabled.

> ...if I'm poor, or become poor, I still have to pay the assesed property tax on any property I own.

Are you really poor if you own valuable assets?

Speaks to a problem of means testing property taxes on anything other than the property value - how to define poor in a way that can’t be games by skillful accounting?

A fix to this would be to lien the property with the unpaid taxes, but not force the sale. Eventually, the owner will sell or die. The tax liens can be recovered at that point.

For an example tax of 2%, the property could sustain the liens for decades, allowing the owner to keep control of the land, even if they're unable to pay the taxes owed. The revenue to the government could be provided by bonds backed by those liens. Maybe require some portion of the tax to be paid in cash, and some penalty rate on the liens, to encourage payment of taxes by those that can afford them?

If you're poor, how did you come to own the assets in the first place?

If you became poor, then maybe you should sell the property to gain more liquidity, balance your portfolio, and transfer the property to someone with enough income to fully maintain it.

People's situations change all the time. And saying that someone should have to leave their property that they own because they can't afford the taxes on it is pretty awful. Especially if they can't afford them because property values spiked.

Many jurisdictions offer deferred property tax payments for the retired, or disabled.

Aside from that, someone who owns valuable fixed property free and clear should be able to find a lender who can open a small mortgage against the property to cover taxes.

I would still require income to be able to pay back that mortgage.

They can also be quite regressive. If you buy a house somewhere, live in it and retire, and then property values shoot up, you're kinda screwed.

Hence Prop 13 in California--which lots of folks here complain about on a regular basis.

The federal government has no Constitutional authority to outlaw sales taxes on intrastate sales.

This is worse - those are in-state sales according to most states: your goods are shipped from a warehouse in the state to an address in the state.

I did realize that, but there are ways the federal government could do it. For example, the way they strong-armed[1] all the states to impose a 55 mile per hour speed limit for a period of 2 decades by threatening to cut off highway funding.

[1] https://en.wikipedia.org/wiki/National_Maximum_Speed_Law#Ena...

That was an unconstitutional disgrace and should not be a model for the future.

I downvoted this, but now I wonder if I was too hasty. I agree that it might be a disgrace, but I don't know of any legitimate argument that the approach was unconstitutional. Do you have such an argument?

From a strictly legal perspective, probably not. But, in general, we shouldn't applaud the federal government effectively forcing the states to implement policies through indirect measures when it isn't allowed to do so directly.

There possibly comes a point when the stick becomes so big and so disconnected from the behavior being forced that an amenable Supreme Court rules it's an end run around the constitution.

They lacked the explicit constitutional power to enforce the federal will, so they did it in a sneaky, backhanded manner by pulling at the purse strings.

Same BS as making the uniform drinking age of 21 years.

The feds raise taxes in every state to pay for something, then extort those same states to dance to the federal tune in order to get back some of the money taken from their citizens to build roads that would benefit them. If the Feds didn't take that money, the state could have taken it to build their own roads.

It would be great if the federal power could not transfer funds to the states without using apportionment solely by criteria that cannot be gamed politically. Divide-and-conquer is not a tactic that should be countenanced within a federation of supposed equals.

I think Real ID is the latest round of the same way of strong-arming the states, by denying to non-compliant states a benefit that will be enjoyed by compliant states.

There was nothing unconstitutional about that. The States were free to set whatever speed limit they liked if they didn't want federal money to fix their state highways.

Moreover, that mechanism is precisely the mechanism by which the Federal government convinces states to enact federal policies: by dangling federal monies in exchange for the enactment of state laws.

False, the court found this sort of thing Constitutional in South Dakota v. Dole.

Wickard v. Filburn, 317 U.S. 111 (1942).

The parent comments mentions a solution where there can still be different tax regimes like the EU. But, you only pay tax to one place and they take care of splitting. Let the bureaucracy do it's work.

You have it backwards. taxing consumption is actually more regressive than taxing income - the spending a wealthy person has is far more variable (and generally a lower % of income - some of it goes to investments, etc).

domestic investments => jobs

Not true if "investments" are just chasing fixed assets like real estate in a zero-sum manner.

Actually, there is no reason a consumption tax can't be progressive. Comsumption = income - net_savings. Some years you might even have negative net savings, and the formula still works.

It turns out that reports from all the same reporting entities that report to the IRS now are nearly sufficient to implement such a scheme, most of the data is there, it just might have to be reformated, perhaps some bits and pieces added to the report.

You can exempt consmption below some amount, say a reasonable amount of money to feed, cloth, and house your family, and provide basic transportation. Then you can have a progressive tax rate applied to consumption above that. Rich people are not going to stop buying yachts, fancy cars, linen suits, and avocado toast. The net effect on the economy should be good overall.

Usually when someone says "consumption taxes are regressive": a) they only imagine collecting the tax point-of-sale, and b) they don't imagine a consumption tax with a variable rate. But in reality, a progressive consumption tax is a simple matter of tweaking the current reports sent to the IRS by employers and financial entities for the income tax computation, and then applying different arithemetic.

Alternatively Amazon could be responsible for collecting and paying the sales tax for you.

They could, but they don't want the potential liability when they get it wrong. And they will get it wrong, sales tax rules can be incredibly arcane.

For example, in Minnesota groceries are tax-free but ready-to-eat prepared food is not. If I buy a pizza from Papa John's it gets taxed, if I buy a bake-it-yourself pizza from Papa Murphy's it doesn't.

They already have to deal with this complexity for their own products.

Yes, but they can justify the liability for products they sell themselves. There's also a problem with products that Amazon doesn't sell which are carried only by third parties.

Ad. 2

I've seen proposals (in EU countries at least) to do the opposite: eliminate personal income tax in favour of VAT/Sales tax - removes the burden of filling (and more importantly processing) personal income tax returns, removes 99% of all entities that could be subject to tax audits and so on.

#2 sales tax is highly regressive/flat, income tax is progressive to highly progressive, and property tax is mildly progressive (property is a form of consumption).