Amazon Sales Take a Hit in States With Online Tax
bloomberg.com
bloomberg.com
I can pull up Amazon and read ratings/reviews, see what kind of problems people ran into with products, and make a reasonably informed decision with my money.
In a big box store, I feel like I'm taking more of a chance unless I stop, scan the barcode, read through reviews. Meanwhile, I look like a silly guy who can't make up his mind.
Yes, I enjoy obsessively comparing reviews/ratings for potential purchases. Even the really cheap/insignificant ones...
Some employees are very informative and helpful while many aren't.
Of course if the price is right...
The primary benefit of Amazon for me is not having to deal with a brick-and-mortar store.
This is exactly how I feel. The primary draw of Amazon for me is that it lets me avoid the brick-and-mortar shopping "experience". Heck, I'd pay extra to not have to deal with it.
Basically, lots of stuff requires interaction (holding a bracket or a screw in my hand to determine if it will fit) and other stuff (2x10's, 48x96's, toilets, refrigerators etc) is simply unfriendly to shipping. Home Depot of course ships wood, but they specialize in that sort of thing and ship in great bulk.
If I know I want exact product XYZ, need it on a time scale of 'days' and not 'hours/minutes', and don't have any other need to go out ... why not order it online?
IKEA on a rainy Saturday afternoon.
(read it somewhere, but really can't recall the source)
- IKEA cafeteria
- seated beside family of six
- children are bored
- in China
- on a hot summer day
Some pictures: http://www.cnn.com/2013/08/09/travel/gallery/china-heat-ikea... ;)
When I thought about the whole situation, it became apparent constitution has a bug here. The sales tax is not supposed to be levied because the state is providing some service to the business. It is levied because that's how states want to distribute the burden of taxes on two components: What you earn and what you spend. This way you can target most of the money flow that happens in the state even for edge cases where a person don't have regular income but spends a lot out of his or her inheritance.
So summary here is that online retailers got lucky from this bug in constitution. It was extremely unfair to brick-and-mortar guys who not only have to spend lot of capital but also pay full taxes losing their competitive edge even faster.
Note: Above are just observations and logical arguments. Personally I don't have lot of respect for current tax system.
Governments should pass tax laws in some sort of industry standard tax rules specification[2]. This way, companies and the open source world can write rules engines to process taxes and online stores can pick among the competitors, not having to worry about the complexities themselves. Costs are reduced, competition increased, and consumers win.
[2] this might also make taxes simpler. If legislators can't encode (compile) it, they can't legislate it!
http://www.marketplacefairness.org/
It requires each state that wants to collect from foreign sellers to provide a uniform state-wide sales tax policy, a single organization in each state to handle registrations/filings/audits, and free tax compliance software. It also builds a mechanism to certify companies (like Avalara) to take care of internet sales tax for you, and relieves businesses of liability for mistakes if they use one of these companies to compute/file their taxes.
They calculate and file your returns for you. They get paid a commission directly by the states for facilitating it, so they're free to businesses.
From an outsiders perspective what the USA needs is a proper reform of the constitution and remove a lot of thinkgs from the perview of the individual states.
A maximum age for senators, congessmen and judges would also be a good thing.
[1] http://factfinder2.census.gov/faces/tableservices/jsf/pages/...
VAT works fine once you have the infrastructure in place.
People may gripe about it for a bit... but amazon is still the best way to shop, and also has the best selection and prices.
One thing Amazon still does best: their deliveries arrive on time, and seem a lot less likely to get stuck in UPS limbo.
Most of the time, I think a few seconds about the difference in price between amazon and that minor retailer, and unless the difference is huge (which is usually not the case), I'll go for Amazon. Even when I had issues with what I got from Amazon they sent me the replacement item BEFORE I even send back the defectuous item. Who else does that?
Not sure why they buried this at the end of the article. Amazon can still attract price-conscious shoppers by funneling them to marketplace sellers that don't collect sales tax, and can now invest in more fulfillment centers and other initiatives that require nexus (Amazon Fresh, etc.)
What would be impressive is if Amazon made an (algorithmic) judgment call, and showed price-sensitive shoppers that would otherwise go elsewhere the cheaper seller, and shoppers that would tolerate the tax the (presumably higher profit) Amazon offering.
Having Amazon Prime and knowing I'll always get the item on the second shipping day means that I'll chose the Prime item even if the marketplace seller is cheaper.
Our data consist of daily transactions for 2,807,476 households from January 1, 2012 to December 31, 2013, and include both banking (i.e., checking, savings, and debit card) and credit card transactions. We observe the date, amount, and description of each transaction.
I'm a little disturbed that they had access to complete transaction information for roughly 2% of American households. Is it common practice for banks to share this data? Surely date + amount + description is personally identifiable in many situations.
This would give Amazon a huge competitive advantage (given their existing infrastructure). Of course they support this.
It's similar to Walmart's minimum wage support. If Walmart were against minimum wage increases, their opponents would lambast them for it. If they're in favor of it, they get accused of only being in favor of it because they know they can more easily afford it compared to smaller retailers.
Now that they agreed to start paying sales tax going forward (in return for no back-penalties), they are lobbying for their competitors to have to pay sales tax as well.
They are also building warehouses in-state now and trying to compete on speed of delivery, which is a more respectable way to compete against out-of-state rivals.
Is this intractable?
The actual question is if there's enough political capital to get it through congress, in the face of united opposition from the low tax states and the republican caucus.
I do think this answers the OP though - it's probably just not important enough to be worth the fight!
I keep all my receipts for the year and split them between tax paid and not. I pay taxes on all of the online purchases I make during the year. Most people I know, even in states that require collection of taxes for online purchases, don't claim any at the end of the year. Given that out of state companies are under no compulsion to report purchases to state governments, there simply isn't a whole lot of way for states to know whether the information is accurate except through state tax agency audits.