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Comment by mlindner | Hacker News Reader

$100,000 in sales is a very low bar. That's equivalent to a business with a single employee, the owner, and they're probably not making a livable wage yet.

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$100k of South Dakota revenue is either an almost exclusively local single-owner business or a much larger internet shop.

But regardless, that kind of number is a full time job. If you're selling over the internet and making a full time job out of it, you can handle computing sales tax for SD residents. Yes, it's burdensome. Yes, it would be good to have a simpler federal framework for this. No, it's not the end of the world.

"No tax on the internet" sort of made sense in 1997 when it was a new and exciting market and we wanted to see what would happen. Now, it's just a giant subsidy for Amazon. We can put that money to better uses.

I think you've got it kind of backwards. The absence of tax collection is what allowed Amazon to become Amazon and this change is now a barrier to a new entity challenging Amazon.

Amazon voluntarily started collecting taxes nationwide without a blip to its bottom line.

The new law will in fact put Amazon's first-party goods in parity with 3rd party sales. Third party sellers could often undercut Amazon's own pricing due to the disparity.

This tax change is a huge win for Amazon on many fronts. Any protests they make to the contrary are strategic, imo.

It's a win for a part of Amazon's business, the part that stocks and sells its own products and is already collecting taxes. It's a loss for the other, larger side that gets paid to stock and ship products from 3rd parties who by and large do not collect tax.

This makes it tougher for these small businesses to compete and since Amazon takes 15% of those sales AND makes money off them for fulfillment services.

Perhaps. It could also incentive a new round of internationally based direct-to-consumer dropshippers to take e-commerce to the next logical level, now taking advantage of the differential in international sales tax regimes. Aliexpress is an example.

All this would do is create an opportunity for a SaaS startup or existing payments provider to offer collecting the correct amount of tax for you.

I personally worked on this sort of problem for a large company; most of the work is in figuring out what the business logic ought to be; turning it into code is (largely) trivial.

Figuring out the logic only needs to be done once, and the payments provider is the natural place for it to live.

Indeed, several already do this - Fastspring, Paddle, and there are services like Taxamo (although I'm not sure if Taxamo actually remit the tax on your behalf, or are just an API to calculate what your obligations are).

It could actually be a huge win for Amazon's third party sellers as well, as services such as FBA could handle the tax collection on behalf of the third parties. It just adds to the value that Amazon can provide in its services for sellers.

The stock market disagrees with you.

> $100k of South Dakota revenue is either an almost exclusively local single-owner business or a much larger internet shop.

Note, though, that for South Dakota it is $100k in annual revenue or 200 transactions per year.

Consider a company selling a subscription product/service for $5/month.

If they had a mere 17 customers in South Dakota, their South Dakota annual revenue would be a mere $1020, but they would have 204 transactions per year.

This assumes each re-billing on a subscription counts separately. If it could be counted as a single $60 sales that is merely being billed in 12 equal parts, then they would only have 17 South Dakota transactions.

I think this needs to be upvoted more. The 200 transaction threshold is very low for low priced products - I sell a $20 Photoshop plugin, and $4000 is not much revenue to suddenly have to register for & remit South Dakota taxes. Apparently Vermont will have the same 200 transaction threshold [1].

In practice though, indie retailers will use reseller services that collect & remit the taxes on their behalf, in return for a ~10% cut. I use FastSpring for my shopping cart, others use Paddle or Gumroad. The EU has had similar tax laws on internet sales since the mid 2000s, and Australia will enforce their own 10% internet tax on non-Australian internet businesses from July 1st.

[1] https://taxfoundation.org/amicus-brief-south-dakota-v-wayfai...

> - I sell a $20 Photoshop plugin, and $4000 is not much revenue to suddenly have to register for & remit South Dakota taxes.

I wonder if Adobe publishes how many noneducational Photoshop licenses South Dakotans buys a year. As I highly doubt you're in any danger of needing to pay SD tax.

At like a 10% profit (in the best case), that's a pretty terrible full time job.

You are grossly underestimating the markup on goods sold online.

> Now, it's just a giant subsidy for Amazon.

But it's not. This line is reasoning is very outdated.

They have built a massive network of warehouses all over the country, and that's the physical presence that a state sales tax collection clause needs to come into effect. Amazon has been charging people sales tax in many states for a few years now. (I wish I had a number of states, but top jazzy to look it up.)

>But regardless, that kind of number is a full time job. If you're selling over the internet and making a full time job out of it, you can handle computing sales tax for SD residents.

But it isn't just SD, it's hundreds, if not thousands of jurisdictions. One person doesn't have that kind of time.

Thanks for your assertions. Have you ever acted as a small Internet shop employee in close connection to the 'executives'? I have. From what I have seen, because people in small shops have to be generalists you are often splitting the attention of the people with the most comparative advantage to innovate by increasing their regulation burden. It isn't even the fiduciary cost of the tax that is impressive even though that's unfortunate that their mark is so low. It is the labour cost that adds up when people have to take time away from actually manufacturing product during early stage work.

> Now, it's just a giant subsidy for Amazon.

It was always just a giant subsidy for Amazon.

The computation is simple. Isn't the harder part the filing & paying?

I think that's the point. It's supplemental income for someone - not a real business.

That's not their entire sales, that's their entire sales to people in South Dakota.

If you do business nationally, with a million in revenue, $100k for South Dakota might not seem too bad, but $100k for California or Texas starts to feel really claustrophobic.

It's an interesting precedent.

It's $100k or 200 transactions. 200 transactions is just 17 customers with a monthly subscription.

For one state, so 50x that, which is $5m.

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