Amazon Tells States: 'Drop Dead' Over Sales Tax
wired.com
wired.com
Sales tax is arguably regressive, so it already has one hit against it. And in the internet age, when it is not enough to do business in your home state, sales tax is becoming a bigger burden to collect.
That said, Amazon is large enough it could collect sales tax no problem. I am just thinking in general, it may be time to look at another form of tax to fill the void for sinking sales tax revenue.
Also, non-regressiveness is a far cry from an established benchmark for a "good tax".
Given that, progressive taxes are just as foolish. A rate is a rate.
First, "drop dead" is not mentioned by Amazon anywhere. The article title looks a lot like linkbait. Not upvoted. It also looks to pander to a political viewpoint.
Second, as far as I can tell, if you wanted to find the real political story here (since this is a story with both tech and political overtones) is that the big box retailers are looking to put the squeeze on their competition, and using government to do so. Yes, states are in dire straits, and yes, there are good arguments on both sides of the issue. But -- follow the money. Who stands to gain from higher-priced internet goods? Who stands to lose? Remember that, as an internet user, I'm free to purchase offshore as well. The big box guys know that. They know that the states will not receive one-tenth the amount they dream of. They're just happy to be throwing rocks in Amazon's way -- and using the government to do so.
I remember many years back when Microsoft had to start paying for lobbyists in D.C. The big buzz in the tech community was confusion: why would a company that made computer programs need lobbyists?
Of course now the answer to that question is all too clear: just like every other industry, some players played fast and loose with the rules, government intervened, and suddenly everybody had their checkbooks out to keep from getting squashed (and to squash the other guys as much as possible.)
I think this is a fascinating issue for many reasons, but specifically for this one -- the fact of the matter is that big box retailers like Target are at a huge competitive disadvantage when competing against internet-only retailers like Amazon because of state sales tax laws, so it makes perfect sense that the big box retailers would say to the government: "Hey, this company found a loophole in your rules that I can't exploit!"
Also interesting is the fact that the case that Amazon always leans on, Quill v. North Dakota, took place in 1992 -- before the internet era even began. Yet another instance of the government not keeping up with this whole "internet" thing and changing laws to reflect that reality.
The highest tax on there can't account for the huge markups I see in stores. The tax would be less than shipping on everything I've ordered. Ordering online is still cheaper if you add a 10% sales tax to the shipping cost.
What essential differences do you see between Quill (a mail order company with a physical catalog) and Amazon? Suppose that Quill had distributed its catalog via CD - would that make a difference?
The only thing different between the "mail order age" and the internet age is the relative amount of commerce occuring via the latter. That doesn't come into play wrt whether states can "ask" for help collecting taxes from their residents.
Which reminds me - states that have no sales tax often have stores next to their border with states that do have sales tax. Residents of the states with sales tax will cross those borders to buy things at said stores, thus avoiding the tax.
Should those stores be obligated to collect tax for the sales tax states? If not, why doesn't the same rule apply to mail order and the internet?
Feel free to assume that said stores will mail goods post-sale that weren't in stock at time of purchase.
NY/NJ
Should those stores be obligated to collect tax for the sales tax states? If not, why doesn't the same rule apply to mail order and the internet?
In the case of NY, if you buy goods out of state you are expected to pay NY state sales tax on them.
Growing up in Washington Heights, a few blocks from the George Washington Bridge, people would regularly grab the bus over to one of the Jersey malls for various items on which there was either no state sales tax or a much lower tax. Clothing was a big item. Also gas was always cheaper, for the few I knew who had cars.
Many years later I learned that New York State expected its residents to duly report these purchase and pay NY State use tax on these out-of-state purchases.
I'm sure that happened a lot.
But it's an interesting point. If Amazon is not collecting sales tax based on the customers state of residence (a la NJ and NY) then the state should be going after the customer for the use tax (something Washington state has done for purchases made from Oregon-based stores).
You're absolutely right that the main difference is the astronomical difference in scale, but you're ignoring the fact that internet sales are entirely on-demand, whereas mail order sales still require a physical catalog to order from. This may not sound like a significant difference, but the instant-on internet fundamentally altered the way the public buys the majority of its goods in a way that mail order businesses never could. This is what I meant when I said that the government didn't change its laws to reflect the reality of the internet, and it's why Quill v. North Dakota isn't a great example of today's reality.
Personally, I think the problem is a simple one to solve by doing what Illinois (where I live) did this past year with its tax form -- basically, you had two options: you could either a) calculate what you actually paid in sales taxes via receipts and whatnot, or b) divide your income by some small percentage, and choose the higher of either that number or $50. (Or something like that.) The kicker was this instruction -- Do not leave this blank. (The irony, of course, is that Illinois passed an "Amazon tax" law of its own earlier this year.) Since no one wants to be audited, I'm sure the rate of compliance was pretty high.
Huh? How is ordering something from a catalog not "on-demand"?
> whereas mail order sales still require a physical catalog to order from. This may not sound like a significant difference, but the instant-on internet fundamentally altered the way the public buys the majority of its goods in a way that mail order businesses never could.
I don't buy it. I grew up during the "catalog" days. Every house had several catalogs for various types of items, collectively covering pretty much everything that said household would buy.
During my time, almost all of these catalogs had 800 numbers so one could order instantly. That said, during earlier times, depending on where you lived, sending in an order form was no big deal because there often wasn't a local supplier.
Remote commerce is not all that new. Heck, folks even bought houses via mail-order.
In other news, boomers, hippies, yuppies, gen X etc did not invent any sex acts either.
Here's a pic: http://images2.dailykos.com/images/user/426/Ford_to_City.PNG
I'm glad they're doing this. Given that the company sells a lot of different things, and given that different states, counties, and municipalities can all have different rules for how to categorize goods, which matter in terms of how much sales tax you pay for them. I sure wouldn't want to be the person who has to figure out whether Fig Newtons are cookies or are actually "Fruit and Cake" in every jurisdiction in the US where it matters.
However, I think having a sales tax based on location of seller rather than buyer doesn't make as much sense. The big companies like Amazon would find loopholes that allowed them to originate from low/no tax areas and smaller sites without the ability to relocate would be stuck with most of the burden. This just changes the fight from big box vs. internet to small site vs. big site.
Every locality in Washington state potentially has a different sales tax rate. And, Washington just changed their rules so that the sales tax for instate merchants is not based on where the merchant is located, but where the customer is. So, for every small business that does any business other than through a physical storefront, they need to go based on (at the very minimum) the zipcode. (http://taxrates.dor.wa.gov).
And that's just Washington State.
And that quote illustrates he hypocrisy. Connecticut wants to receive money from entities outside their state, but they will not service those same entities outside their state.
This is all about getting something for nothing. If a state wants to tax entities from outside the state, then it should bring on new responsibilities for that state. Connecticut should be servicing Amazon in some significant way, proportional to the amount of money extracted from it.
The best way for amazon to fight this is to insist on a fair and equitable trade of tax money for state government services.
The argument here is not over if the tax should be paid or not, or even over who should pay the tax. the argument is over who should collect the tax; the states want the retailers to collect because that's likely to lead to increased compliance, and the retailers want the state to collect, 'cause that makes out of state goods look cheaper to people who plan to not report their use tax.
As lsc pointed out above, that's not the case at all. Amazon is refusing to collect taxes on behalf of its customers, not refusing to pay its own taxes.
By law, citizens are supposed to tally up what they bought from internet retailers over the course of the year and pay any remaining sales tax on April 15th. Shockingly, this isn't happening, and the sales taxes aren't being paid at all. So these states want Amazon to behave like a bricks and mortar retailer, and collect the tax at time of sale instead.
Amazon doesn't want to collect sales tax because not doing so makes their prices look lower than competitors like Barnes and Noble, which does collect sales tax. Nothing more, nothing less.
and
“The sales tax collection is very complicated. The right place to fix this is with federal legislation.”
edit: what part of "No Tax or Duty shall be laid on Articles exported from any State." is unclear?
Based on this observation, I find the explanation that Amazon's not interested in spending the money to track state and local sales tax policies to be more plausible.
If B&N is calculating "Shipping + Tax" while Amazon is just calculating "Shipping" there will be a slight difference in price. And why not go with the cheapest?
Maybe so, but go look at sticker prices of Amazon vs BN. I bet 9 out of 10 times, if not more, Amazon is cheaper at the sticker price level.
I am not a tax expert, but here are some examples I know of: A buddy of mine recently purchased a car while living in Texas, then moved to California a few months later and was required to pay the difference in sales tax on it before registering it.
New Hampshire doesn't have sales tax. The state of Massachusetts assumes people who reside in border towns will be purchasing goods there and automatically bills a yearly flat rate.
This is why I think it's about them wanting their goods to look cheaper rather than about any actual pain. If it was about the actual pain, they'd support the idea of different sales tax for every little hamlet because it raises the barrier to entry for people like me, e.g. selling my widgets myself rather than going through amazon.
Although as his been said, Sales Tax is usually regarded as a tax on consumer consumption rather than a tax on business which is why business to business sales are often exempt from sales taxes.