An Open Letter to Jeff Bezos

And Amazon really won't really feel any pain. Only Californians are being hurt by this in terms of lost jobs, lost income, and lost income tax revenue.

What share of sales tax do you think Amazon is supposed to pay?

The tax is not paid by amazon it's paid by the people who purchase goods from Amazon. The people who purchase goods from Amazon have been exploiting the fact that it's unprofitable for the state to enforce the law on them. The sales tax law has been very clear that people who buy goods out of state must pay CA sales tax on them.

Amazon's position is that they do not wish to burden their business with collecting state sales tax on behalf of their customers. It's obvious interference with interstate commerce on part of the California gov't which is why the state has resorted to tenuous links to in state commerce such as having an affiliate in state.

The blogger should be more upset with her fellow Californians who use Amazon to skirt CA tax law. CA changed the laws because it's much more profitable to enforce against Amazon than thousands of tax evading citizens.

If the blogger wants to use Amazon all they need to do is incorporate in a state with tax laws that are conducive to Amazon's affiliate program. An S-corp or LLC should be fairly revenue neutral for them.

I think we need such legislation, with the caveat that there needs to be an easy way to compute the amount of the tax. (Figuring out what sales tax rate would apply at the purchaser's exact location is hard because of county and city taxes. In some cases the 5-digit ZIP code is not even sufficient.) A single tax rate for all such sales is probably too simple, as it would put online retailers at a disadvantage when shipping to a state with no sales tax. A single tax rate for each state might work. At the other extreme, it could probably be done based on the 5-digit ZIP code, but I don't think it would work to go any finer than that. Even at that level, we'd need an online service to do the lookup.

The complexity of dealing with 50 different state sales taxes isn't much of a problem. It's the tens of thousands of county, city, and local sales taxes that make it a problem.

In what way are they double-dipping? When you buy things in CA you're supposed to pay sales tax.

Double dipping? Is that factoring in the sales tax that was never collected in the first place?

You're right. However, state's don't really care about logic. They have one hammer: Legislation. Everything is a nail to the legislature.

I think you're slightly off here. As I understand it, what these states are trying to do is consider Amazon's independent affiliates a physical presence for Amazon in that state. What that means is that Amazon then becomes responsible for collecting sales tax on items purchased by residents of that state; how they found their way to Amazon and made their purchase isn't relevant. In your example, no sales tax would need to be collected because you're a resident of Oregon and, presumably, Amazon does not have a physical presence there.

You have missed the point I suspect.

Amazon doesn't currently charge sales tax to things shipped to California under the exemption that they don't have a presence in California and therefore their commerce is strictly inter-state.

California has a new law which effectively creates a de-facto presence if someone who lives in California can be an agent for a sale of something from Amazon. (those are the affiliates) and it is the intention of the state to use the existence of those 'agents' to close the tax loop hole that Amazon is currently exploiting.

So when it goes into effect, Amazon terminates its relationship with all affiliates who live in CA(or have their checks sent to California), thus keeping the loop hole open for them, and causing pain to some segment of California voters who may (or may not) be motivated to tell their representative to reverse their stance.

You, up in Oregon, don't see a change except that if you bought from someone in California through Amazon before, well you won't be able to do that now. You'll have to go directly to their web site.

That person still owes the state that tax, that they don't pay their fair tax is the bigger issue.

flietz, nice points but a bit facetious. Of course I only wrote the post because CA's law and Amazon's response directly affect our site. I might have thought it but not taken the time to write it if it wasn't so personal.

Amazon is a net good, I think. It's made products from anywhere available to anywhere readily, reliably and cheaply. It also had created a wonderful ecosystem for small businesses. This is why we chose to affiliate our site with Amazon.

That said, there's no question that Amazon's success further decimated / continues to decimate small independent booksellers and other retailers who contributed more readily to regional economies - creating local jobs, supporting local events, paying local sales tax, etc.

Your local consumer may have more money for local coffee if she doesn't pay sales tax, but her local government has less. Beyond that, her local economy has less from any profit on the TV going into circulation in Washington State rather than staying with a locally-owned business.

That said, I value Amazon's right to compete with local businesses, and the value and innovation their success brings to me, my city, our nation, and the world at large.

Whether or not you agree with sales tax is one question - the one addressed by your points above. But if it exists for some, how is it fair for it not to exist for all?

(The argument that the consumer is expected to pay it either way is not a valid point - the reality is the consumer is escaping it with one retailer and coughing it up at another.)