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Comment by SamuelAdams | Hacker News Reader

The way I've heard it explained before, feel free to correct me if my facts are wrong: State sales taxes.

The big 3 auto makers are all located in Michigan, USA. If they sold a vehicle direct, the sales tax dollars goes to the State of Michigan. Which means all the other states are missing out on *significant* tax dollars.

To force each state to get tax dollars, local dealerships were established. That way tax dollars go to the state the vehicle is sold in, rather than the state the vehicle manufacturer is located in.

I'm curious if this has changed at all over the last 20 years with the rise of e-commerce. For example, when I order a product on Amazon, do I pay taxes on that product for where I live (where the product is "purchased"?), or where Amazon is headquartered?

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Yes, as of Jun 2018:

https://en.wikipedia.org/wiki/South_Dakota_v._Wayfair,_Inc.

> The big 3 auto makers are all located in Michigan, USA. If they sold a vehicle direct, the sales tax dollars goes to the State of Michigan. Which means all the other states are missing out on significant tax dollars.

Also, this is not how it ever worked. Sales tax was and is never owed to the state the business is operating from. That is why buying online resulted in being able to evade sales taxes for many years, until the above Supreme Court ruling.

I wrote evade above, because the other states were not technically missing out on tax dollars. All states with sales tax have a “use tax”, which is owed to the state for bringing in merchandise that you have paid less tax on than if you were to have bought it in the state (Florida might be the only state without use tax for online purchases).

However, pursuing people for use tax for small items is a costly endeavor so most people get away with it. But a car is easy, since it has to be registered, the state can easily demand the use tax before making it road legal, and they do (for example when you buy from a no sales tax state and then take your car to be registered in another state).

States already account for this. For example, in Massachusetts, if you purchase a vehicle in a different state, you are subject to a "use-tax" which is equal to the Commonwealth's sales-tax. Otherwise, car dealerships would be non-viable in MA – everyone would take a quick jaunt over to NH to buy their cars.

You pay sales taxes in the state you register the car in, period. Doesn't matter where the seller is.

I lived in Virginia, bought a car in Delaware... no sales tax in DE. Wohoo? No, had to pay Virginia sales tax when registering the car.

It used to be you could avoid taxes for things purchased online even though you had a responsibility to report it yourself.

To answer your question though, you pay tax to the state it is delivered to when ordering from Amazon.

I don’t think so.

I just bought a car from an Oregon dealership, but I live in the state of Washington, and that’s where the vehicle is registered.

Washington got every cent of sales tax from the sale, and Oregon didn’t get anything.

I wonder if it only works because Oregon has no sales tax though.

IME car sales tax are captured by the registering arm (DMV).

You absolutely pay local sales tax on amazon, not Washington salestax. Taxation is about nexus of transaction.

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