Calling B.S. On Amazon's Taxation Arguments 762
theodp writes "Over at the Center on Budget and Policy Priorities, Michael Mazerov carefully picks apart Amazon's arguments against collecting sales taxes, arguing that they simply do not withstand scrutiny. While Amazon officials say collecting sales tax in every state would be excessively burdensome, Mazerov notes the e-tailer already collects sales tax in virtually every state for numerous other companies that sell on its website. Mazerov also finds it disingenuous for Amazon to argue that it should not have to help support public services in states in which it has no physical presence when the company fails to support public services in most of the states in which it does have a physical presence. Finally, Mazerov isn't buying Amazon's argument that its opposition to collecting sales tax is not driven by a desire to gain a price advantage over competitors, which he finds at odds with the company's own actions and SEC filings. By claiming sales-tax immunity, says Mazerov, Amazon has enjoyed an unfair 5%-10% price advantage over local retailers, while also depriving states and localities of hundreds of millions of dollars of legally due revenue each year."
Consumer's fault, not Amazon's (Score:4, Interesting)
Internet Tax Freedom Act & Why Only Amazon? (Score:5, Interesting)
Calling B.S. On Amazon's Taxation Arguments
Who the hell cares what Amazon claims? If you think it should be taxed, write your representatives and demand they do something about the bill that's been renewed through 2014 [wikipedia.org].
And why are we singling out Amazon? Why not Dell or Newegg or even ThinkGeek? Is it because Amazon is doing too well?
Things just don't add up in Mazerov's posting. He levels charges that sound trivial to prove and prosecute--charges that would result in a lot of back taxes paid to a state. Why doesn't he call one of his colleagues up in any of these states and give them all they need to make a name for themselves? The only reason I can think of is that it's a not a cut and dry clear win for the state. Or there are simply too many companies they'd need to prosecute alongside Amazon -- like Best Buy or Walmart who have a presence in every state and run an e-commerce site.
The simple solution.... (Score:5, Interesting)
When you buy something online or via a catalog, you should pay the taxes from the place it was shipped.
If I go to California to buy something, I have to pay California's taxes and not my own. If I pay someone to go to California to buy something for me, I'd have to pay California's taxes and no my own. But for some bizarre reason, when I pay FedEx to ship it to me, suddenly I do not have to pay California's tax but I have to pay my state's use tax.
So to give an example, if I buy something from Amazon and it ships from California, Amazon should bill me California's tax.
Here's why states hate this idea. Because it would allow the states to compete with each other to bring more shipping business into its state. For example, merely to get a bunch of shipping centers built in Oregon, that state could have no such tax. Amazon would then build their shipping centers there and the other states would get nothing.
There's nothing the government hates more than competing.
ding ding ding (Score:4, Interesting)
Mazerov also finds it disingenuous for Amazon to argue that it should not have to help support public services in states in which it has no physical presence when the company fails to support public services in most of the states in which it does have a physical presence.
Yep. Corporations relentlessly lobby town, county, and state officials to get tax breaks, "loans", grants, and more...all in the promise of "jobs", which is the staple of how politicians get elected.
At least give a look-see to the website for the book The GReat American Jobs Scam [greatameri...bsscam.com]. The author cites case after case where companies get tax benefits, loans, grants, special public utility/infrastructure projects, you name it...and companies stick around until the well runs dry or the find a better deal elsewhere, playing governments off each other endlessly.
Meanwhile, the math behind the "number of jobs" created/saved/etc is pretty dubious, and the author points out that most of them are temporary, contract, or otherwise low-income jobs. What's hilarious is when politicians claim they're helping the tax base- right after giving said company a giant tax break they'll never repay, because the company will jet as soon as the break is over!
Taxes? Amazon pays plenty of taxes. (Score:2, Interesting)
Re:alternative (Score:2, Interesting)
While you're at it, how about shifting from regressive taxes that people try to avoid like sales tax and bring in all your revenue from taxes that are easy to audit, hard to avoid, and aren't so highly dependent on the whims of the consumer. If all of our taxes came from taxation on businesses instead of on individuals, we'd have some inflation for a while and would eventually have about the same buying power after taxes, but we wouldn't feel like we were getting screwed by the government. Instead, we'd feel like we were getting screwed by businesses, and we'd see a serious push for more competition and innovation that would drive our economy forward.
Further, people making their money off of the hard work of others would be impacted the hardest because they would see lower returns on their stock options. And people at or near the bottom would have more buying power than they do now, which is good because they're the ones who actually spend money and keep the economy moving.
I dub this plan "trickle down taxation".
Off-shore (Score:2, Interesting)
Re:Consumer's fault, not Amazon's (Score:5, Interesting)
I honestly had never heard of Use Tax. A quick Google search reveals that I am a criminal.
Fan-friken-tastic...
Re:Taxes, taxes, taxes (Score:3, Interesting)
Do we really need to tax people's money as it goes into the wallet AND as it goes out?
Yes, how else can we take enough money from the producer class to keep the consumer class voting for the status quo?
Re:Use Tax (Score:2, Interesting)
Re:Use Tax (Score:3, Interesting)
TRUST ME. We have such a field on our state tax forms. I know 3 different people who were audited in recent years. One of the things the auditors did was rifle through their creidit card purchase history. Any transactions from entities know to not collect sales taxes for the state automatically were flagged, and any amounts the persons had failed to enter on their taxes, they got NAILED for, roughly 7 times the ammount they would have paid in sales tax. It seemed the sate was QUITE INTERESTED in getting that out of the way FIRST, right after validating the base income of the couples.
If Amazon is not collecting taxes for you, MAKE SURE YOU REPORT THE PURCHASES ON YOUR STATE FORMS.
In some cases, credit card and bank draft purchases may be automatically reported to your state as well. Wether you are audited normally or not, failure to report these taxes is still against your state law.
By NOT paying sales taxes online you are hurting your local businesses, which effects the local flow of money, and has rippling and compunding effects on your state's budget. (money that leaves the state is not getting paid to people who live in the state which is failed income tax collection as well, and more failed tax collection when thay would have spent those paychecks...) Of course, if you can buy a product locally, you should do that anyway, but even worse than buying it online, failing to pay the taxes on it takes money out of state budgets, and states employ people too, so that's a loss to your community (which results in higher property and other taxes to make up the shortfall).
2 things are certain, death and taxes. PAY TAXES. Audits are NOT fun, and cost more than being honest and paying.
Re:Taxes are good... They aren't? (Score:2, Interesting)
Just saying...
What are you saying?
Taxes are bad? Okay, let's eliminate taxes altogether. No more public safety. No more road maintenance. No more bridge maintenance. Oh, and let's not forget the sewage Those utility bills used to be so much cheaper and more reliable when there was a utility commission.
Shangri-la!
Don't back pedal on me and declare some taxes 'good' and other 'bad.' You suggest all taxes are bad.
Amazon, and every business like it, endlessly complain that the American business environment is 'hostile' to their growth. Looking back at the last 15 years, I'd say they got everything they wanted plus more. And yet, the business environment is more constrained by legislation designed protect companies the size of Amazon. And yet the crocodile tears keep flowing as companies the size of Amazon ship their work overseas.
Specifically, codifying State-based tax rates is not rocket science. Every decent shopping cart can do it and somehow Amazon can't?
Re:Taxes are good... (Score:2, Interesting)
Someone has to pay for stuff. We want stuff, as is shown by the increase in the national debt as a percentage of gross national product since the year 2000. As mentioned by the foundation way back in 2003. We say we want to cut costs, but in reality the best we can do it keep costs about the same percentage, about 20% at the federal level I believe, or the productivity of the United States.
As more people buy online, and states that rely on sales tax find that money going away, something will happen because taxes do pay for stuff we want, and we won't give it up. Everyone has their pet pigs.
So what can happen. Internet retailers may have to pay the sales tax, since local residents will not do so voluntarily. This will not be an issue for the big guys like Amazon, but may kil some of the smaller shops. We can go to income tax, which is deemed as less progresive so is opposed to persons who are opposed to transferring wealth. We can call in states like North and South Dakota and Alaska that tend to use the Federal budget s their personal expense account and make them support themselves. This will free up biliions of dollars that states can then use as transfers from federal taxes. For instance, on of the Dakotas had a billion dollar surplus, presumably from a 3 billion dollar federal payment in excess of federal taxes. This itself will solve most problems.
Re:Use Tax - 160,000 different rates (Score:5, Interesting)
There are over 160,000 different sales tax rates in the US. Then there are exceptions like to a maximum item value of $2000 in Memphis or which item is charged which tax.
Also the tax rates are normally aligned with boundaries that postal code, city name or county do not follow, so just checking what mailing address does not help. In Washington State the tax rate follow elementary school boundaries for MTA additional amounts.
There are exception areas that like county land inside of incorporated city boarders. Arkansas has alot of towns like this one block in the center of town has a different rate.
Lastly, there is Texas that bases the tax based on location of the business.
All of this do able - I did it for nationwide service company (kill bugs). Personally, I would place the tax calculation as part of shipping requirement and look to Fedex and UPS to supply the tax rate to use.
Re:Government on the attack (Score:3, Interesting)
You're volunteering to pay higher property and income taxes to make up the difference?
Re:Use Tax (Score:3, Interesting)
No, when opening a bar, you only need to know the laws relating to your bar in that locale.
That's the easy part. The hard part is coming up with the money, just like Amazin's problem.
Yes, there are only 50 states. However, each city might have it's own tax rate.
Let them call the city and ask. Two minutes, less time than putting an order in a box. Even better, we have these things called "computers" these days, they don't cost much, and you can keep lots of data in them -- even tax rates for all the cities.
Or just ignore it, and when you get a tax bill, just pay the damned thing.
Re:Government on the attack (Score:3, Interesting)
No, I'm willing to eliminate 80% of government to make up the difference.
Re:Internet Tax Freedom Act & Why Only Amazon? (Score:5, Interesting)
New York came up with a workaround. Since Amazon lets people be "affiliates", they passed a law that says if you have an affiliate in the state, then that constitutes a physical presence, which means Amazon must collect sales taxes on all sales to New Yorkers.
Amazon responded by saying "fine, we won't have any affiliates in New York then" and cut them all off.
New York said "hey, no fair, you didn't cave like everybody else did, time for angry legal action!!".
That's the basic gist of it.
Re:Taxes are good... They aren't? (Score:2, Interesting)
Seriously, taxes are evil. A necessary evil at times, but evil. The fewer the better...
Oh no. No weasel words. You like taxes. You crazy Socialist. If you are a member of REI, you are a Communist too. Maybe you farm and belong to a coop? Communist!
You like the equalization taxes provide. Consistent roads, consistent building codes, safe water, sanitation services, etc.
As soon as you move out of your parent's basement, maybe you'll recognize how big businesses like Amazon shift their costs onto you with 'taxes are evil' pablum.
Re:Amazon has enjoyed an unfair 5%-10% price advan (Score:2, Interesting)
Re:Use Tax - Best Answer Yet! (Score:4, Interesting)
Thank you. Yours is the best answer I've seen. I recently met a woman from Louisiana her is Houston who had a list of people who bought boats and planes in Louisiana. She was "bounty hunting" use taxes for the State of Texas. My biggest argument against Amazon (or any other company) collecting taxes on out-of-state sales tax is that it increases the cost of doing business without compensating the business for the trouble. Essentially, it is a tax on the business by a government that has no jurisdiction and provides no services to the entity required to comply.
If taxes are too high, that is something that should be resolved by the residents of the individual state. Taxation needs to be revisited. The best thoughts I've seen so far have been provided by the Fair Tax people http://www.fairtaxplan.org/ [fairtaxplan.org] . It probably makes too much sense. Tax collection does nothing about the out-of-control spending and unneeded "services" that cause high taxes.
Re:Taxes are good... They aren't? (Score:3, Interesting)
"Many forms of Government have been tried and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time."
Re:Use Tax (Score:3, Interesting)
...past thhe public (the 90% who bought locally and paid taxes don;t like you assholes who not only fail to, but send your money out of state instead of buying locally and supporting the economy)...
You have local companies left in your town? My town has been overrun by giant mega corporations (Costco, Walmart, BestBuy, Target, Borders, etc.). I would love to be able to go to a local store and purchase from a courteous, helpful, and knowledgeable local employee... but there aren't any. They are all teenagers who don't know anything about what they sell and don't care to help you decide what to buy (unless they get commission, then you definitely need this extra $50 gadget and the $100 warranty). Then I get to the checkout stand and have to wait in line behind twenty other people while the idiot cashiers figure out how to ring things up and spend five minutes per customer trying to talk them into buying the warranty again.
Sales tax is a regressive tax policy. Even adjusting rates for food and medical requirements does not negate the disproportionate effect it has on lower income families. In many cases, the sales tax is levied or increased to subsidize construction of mega stadiums and make wealthy sports team owners more wealthy.
Anyway, I live in a sales tax free state. My state recognizes the burden that sales tax adds to businesses and to the state (collecting it and enforcing it) and has chosen a much simpler, more efficient, and more progressive tax policy (income tax).
Shiping versus sales tax (Score:2, Interesting)
The ones who will hurt most with this are the small businesses who currently have a [inter]national presence via the web. Where is their advantage when this happens? Or rather, how can they compete at all with the big dogs once this is enacted? Corporatism at its best.
legality of states regulating inter-state commerce (Score:3, Interesting)
What ever happened to that bit about States not being able to tax interstate commerce? The 'use' tax is simple a loophole for that isn't it?
There was that brouhaha with New York a year ago [forbes.com]
"The U.S. Supreme Court's ruling 16 years ago in Quill Corp. v. North Dakota reaffirmed that a corporation must have a "substantial nexus" with a state in order to be subject to its sales and use taxes. When corporations lack physical presence in a state and rely only on common-carrier contacts or the mail to reach its customers, those corporations do not fall under the requisite "substantial nexus." Nor does a corporation's mere licensing of software to customers in another state fall under this requirement. "
So why is this even being debated?
Re:Use Tax (Score:3, Interesting)
The best case would be to just have a national sales tax that is the same everywhere instead of the current stupid system.
You are aware that this would completely screw most states AND citizens to the tune of more federal government power, right?
Re:Taxes are good... (Score:3, Interesting)
Sales Tax is not a liability of the seller, it is a liability of the purchaser/buyer/user.
True, many states require companies with a physical business presence within their borders to collect the amount and forward it to the state, but the company is not "paying" Sales Tax, they are collecting it. The buyer is ultimately responsible for paying Sales Tax. If the buyer chooses a business that does not collect Sales Tax for their state, they are still responsible for determining and paying the appropriate Sales Tax to their state. This is commonly referred to as "Use Tax" and the fact that it's largely ignored does not make Amazon liable for their customers breaking the tax laws of their home states.
Amazon pays their share of "state-provided infrastructure" through property and municipal business taxes, and "national defense" through federal business taxes. If they have no presence in a state, they don't owe that state squat. Some of their customers might.
You're EXACTLY WRONG, there is avery good reason (Score:3, Interesting)
"there is no reason that they should be subsidized over local retailers."
Yes there is actually, Amazon doesn't use the facilities and services that said taxes go to pay for, which is the primary justification for collecting taxes from business in the first place.
Re:Strong beating up weak to save the rich...again (Score:4, Interesting)
The way the state and feds are increasingly taxing the hell out of the citizens of the US, I don't see any problem with a person like you described above doing everything they can within the system, to save every $$ they can from what they earn.
Sadly, most people do work direct, and the tax money is taken from them before they get their check.
The only real way an individual CAN keep their money, is to incorporate. I've done it myself, I incorporated in the state and elected for an "S" corporation for federal taxes. It is great. When I do work through that vehicle, I can write off a TON of things, including mileage I drive to/from work which can add up (I do this in lieu of what you described with buying a company car and depreciating it, too much trouble and it does raise red flags for audits if not careful). I also can pay myself a 'reasonable' salary out of my total bill rate, that saves me $$$ in SS and medicare taxes. For example, say I bill out $100K. I pay myself a 'reasonable' salary of $40K. That means I only have to pay SS and medicare taxes on that $40K. The rest of the $60K falls through and EOY on my personal taxes, and I only pay regular state and federal taxes on that. Save a decent amount of money.
Hey, as long as you work within the law, I see no reason for taking EVERY advantage you can. With the govt getting more and more greedy, and not ever seeming to try to cut their spending, I am even more in favor for using every tool at hand to keep my own fucking money.
And today...I can only see it being down by incorporating one's self..and contracting.
Of course, I'm guessing soon...the Feds will soon be trying to crack down on this...I know they're aiming at the Health Savings Account you can set up when working for yourself for this new health bill, I can't see why they won't start trying to target all ways people can cut their tax rates eventually.
But that's another soapbox for another thread...
Re:NO TAXATION, WITHOUT REPRESENTATION (Score:4, Interesting)
You think every state's sales tax is a single flat rate? Good luck with that. Now it is true that it's a less-than-overwhelming amount of data, but if you haven't thought the problem through enough to know that it's not just a table of 50 rates, then you shouldn't be trying to estimate the difficulty.
Seconded..... I used to have a small business selling computer equipment and services only in one state and I had more than 50 different rates to deal with. Taxes even vary based on entities you've never heard of, like regional transit authority. My monthly sales tax filing included filling out a 4 page grid of every entity and its tax allocation, that's just for one state! I spent more time on filing sales taxes than I did on my own accounting. In fact, it is one reason I got out of the business. With the state (and local govt) making 8% on every transaction and me having less than a 10% markup, the state was making more than I was after taxes.... and it was costing me a lot of hours to handle, not to mention the potential liability. Sales tax collection for a business that is not a fixed location storefront really doesn't scale down below a certain volume of business. A small eBay shop doing a few dozen sales a month nationwide would have a hard time justifying its existence if they had to track and pay sales tax for everything they sold. Maybe if there was an online tax clearinghouse for every state that would handle all of the filing, paperwork, etc. if you just plug in the address and sale amount - but barring that you couldn't make it work.
Backwards... (Score:3, Interesting)
Wrong. Local Retailers have suffered an unfair 5-10% theft of their profits compared to amazon. If someone robs you, do you complain that your friends and neighbors weren't robbed to the same extent? You can wax poetic all you want about everyone paying "their fair share", but when party A takes money earned by party B, and uses it for purposes not approved of or supported by party B, it's called theft.
Fuck the sales tax (Score:3, Interesting)
Simple, just abolish the sales tax. It's kind of stupid anyway. Income should be taxed, instead. If someone has more income, he'll buy more stuff so tax his income and sales tax is useless. If a company sells a lot, it has more income. Tax the income instead of the sales. The net result is the same with a lot less red tape.
Sales tax is an invitation to fraud. In my country it's usual for contractors to offer two prices, one with a receipt including sales tax and another without receipt, without sales tax. This is illegal, of course, but it's common practice. Abolish sales tax and it's over.
Re:Backwards... (Score:3, Interesting)
Local Retailers have suffered an unfair 5-10% theft of their profits compared to amazon.
Not true at all. Sales tax is paid on top of the price of taxable goods and services. So a local retailer that charges $10 and $.50 in tax is not losing $.50 in profit to anyone. The out of state mail order merchant who sells the same item for $10 with no tax makes no extra profit. The state simply does not collect tax at the time of the transaction (the buyer should pay use tax on his or her state tax return).
Allowing states to collect sales tax on out of state purchases violates the US Constitution's commerce clause, which reserves to the federal government the power to regulate interstate commerce. This is to prevent small issues like collecting and paying sales tax to the aver 41,000 sales tax collecting government units (yes, there are state, county, city, township and in some cases school boards that collect tax) that exist in America. Interstate sales tax effectively turns sales taxation into a tariff system that could be used to give local business an unfair advantage over out of state merchants, and would simply return our economy to the state it was prior to the American revolution.
Taxes are tied to physical location (Score:2, Interesting)
This has been a gray area for a long time now. Since taxes are tied to physical locations, the Internet has always been problematic in that it is (more or less) all encompassing.
I do agree that this looks like more of the "rich taking from the poor" again. Most online purchases are small, as in, in the realm of a few hundred dollars or less. In the future I could see taxes being collected on large purchases, say, for those totaling $1000 or more, but getting tied up in taxing micro-transactions is often more trouble than its worth.
I think the primary reason this hasn't been a bigger issue is because e-commerce in general has been a huge cash cow for lots of businesses.
Real reasons we cant tax this (Score:2, Interesting)
Re:Taxation is Theft (Score:3, Interesting)
Taxes paid for the DARPA-funded research you use everyday, grandparent.
The Internet could be different if DARPA didn't do what it did, but neither the concept of networking systems together nor the means of achieving it were by some "divine inspiration" only accessible to those who use coercion to achieve it. Besides, pointing to a "good" done by government doesn't invalidate my point, young pup.