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Comments: 762 +- News: Calling B.S. On Amazon's Taxation Arguments on Tuesday November 17, @02:57PM
Posted
by
kdawson
on Tuesday November 17, @02:57PM
from the didn't-do-it-nobody-saw-me dept.
from the didn't-do-it-nobody-saw-me dept.
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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."
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Use Tax (Score:5, Insightful)
I think the real problem is that since nobody does this, they expect Amazon to do the legwork.
Realistically, it is a businesses' job to collect tax for the state it currently resides in. It would be an undue burden for just about any business to get the workings of every other state's tax just to do business, say, like a phone order!
Sure, amazon is big enough, but that still crushes the little guys with a hefty start-up capital requirement, and a full time tax guy to figure this out.
What they need is a disclaimer telling customers that they may need to report the use-tax, and give a hyperlink to more info on that.
Re:Use Tax (Score:5, Insightful)
I actually do pay use tax, and the fact that no one else does really makes me feel like a chump.
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Re: (Score:3, Funny)
I'm sure the IRS does a little happy dance every time they see that someone actually paid their use tax! At least you should never ever be audited.
Re:Use Tax (Score:4, Funny)
You're not thinking like the IRS. Their line of thinking would be as follows: "Hurm...they are paying use tax. Must be trying to hide something else."
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Re:Use Tax (Score:5, Informative)
Ahem.
The IRS has *nothing* to do with Use Taxes. That's your local Member State that collects use tax, not the central government.
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NO TAXATION, WITHOUT REPRESENTATION (Score:4, Insightful)
How's that for an argument. I sell a lot of stuff on Ebay (used games, videos, et cetera that I no longer want), and New York State has the gull to tell me I should collect taxes when I sell items to New Yorkers. And then file a tax form with NY and pay the money due. I say:
"No Taxation Without Representation"
I am not a New York citizen and never plan to be. If New York wants to give me and the other ~250 million non-NY Americans representation in their Legislature, then okay tax us. But until that happens, we shall consider ourselves foreigners. We owe neither allegiance nor taxes to any foreign government. The New York Legislature can go get fucked.
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Re:NO TAXATION, WITHOUT REPRESENTATION (Score:4, Informative)
Strangely enough, I agree with this. I'm definitely not against taxes in general and sales tax specifically, but it doesn't make sense to me that a retailer should be required to lift a finger to help a state government from which it gets nothing in return. Those taxes are not going back to Amazon; those taxes are going to pay for things like police and schools in the community in which the *buyer* resides. And yes, the buyer is the one actually paying the tax, but it is ridiculous to expect a company outside of the state to pay any of their own money (in time and effort) to do the work of collecting that tax when they have no say over whether and how that tax is collected.
The states' beef is with the buyers, the actual payers of the tax, who then see the benefits from those taxes. They should be the ones required to collect their own taxes, not the retailers who will never see a dime of the money they spend collecting the tax come back.
This is really no different than what the RIAA is doing. It's the same mentality; if you can't get recourse with the people who you actually should be going after, then just go screw somebody else somewhere up the chain instead.
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Re:NO TAXATION, WITHOUT REPRESENTATION (Score:5, Insightful)
Really? So, you don't have the right to sell me something without paying a tax? We can't meet, and mutually agree on the terms by which we'll exchange value for value
Something you have to buy from the government is not a right. You buy services from the government. Rights exist in and of themselves.
Only a dyed-in-the-wool Nanny Stater thinks that rights come (in exchange for cash!) from the government. It's a shame that there are enough I-Want-A-Nanny voters out there to elect Nanny legislators, Nanny governors, and Nanny presidents, but there you have it.
Out of curiosity, what did your right to free speech cost you? Or did someone else pay for that, for you? Yeah, I thought so.
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Re:NO TAXATION, WITHOUT REPRESENTATION (Score:5, Insightful)
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.
A more serious issue is that any state can change its tax laws without any particular schedule or required notice. Realistically the states would have to be responsible for broadcasting this information in a mutually-agreed-upon form.
A system like that probably would work. Note that in my above quote, I didn't say "it isn't reasonable..."; I said "the supreme court doesn't consider it reasonable". With the modern state of technology, I think that's a bogus argument, but it is the current law.
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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.
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Re:NO TAXATION, WITHOUT REPRESENTATION (Score:5, Insightful)
Of course there is; you can refuse to sell there. But then, why is it any of your business? If the people paying the tax - those being the buyer - think an 8% sales tax is worth what the state provides them , that's none of your business. The fact that you would be called on as an agent to collect said tax does not give you a legitimate voice in deciding how high the tax should be.
You make a valid point but...
The state of New York has no authority to "deputize" some guy in Virginia as their tax collector (or else arrest him). Do they? I cannot think of any legal justification for that. Can you?
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Re:Use Tax (Score:5, Funny)
I actually do pay use tax, and the fact that no one else does really makes me feel like a chump.
I hope you're paying the chump tax, otherwise you're nothing but a scofflaw.
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Re:Use Tax (Score:4, Informative)
Actually, if you leave that field blank on my state's taxes, your odds of an audit go up by nearly an order of magnitude. More so if you are over 55 and have multiple credit cards. (as they know you likely use mail order, and likely there's money to collect).
Proving these violations is REALLY EASY for a state. They simply need your bank statements and credit card statements, and they look for checks and credit purchaseds from out-of-state companies they already know don;t colelct tax, and then bill you the tax, times three, plus interest and penalties (usually ending up somewhere around 7 times the taxes you should have paid). This process takes about 30-60 minutes for the agent, and you get screwed. I know SEVERAL families who have gone through this recently, having made numerous large purchases online.
The state is not only concerned about purchases made without paying tax, they're also looking for in-state companies you may have paid that to, so they can go after them as well... This is easy money for the state, and an easy argument to get 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). It's a win-win for the politicians, and a huge negative credit mark and a big bill for you.
Most people understand this... you need to learn it. You can choose the easy way or the hard way. (if you;ve been cheating a while, I'll vote for the hard way for you).
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Re:Use Tax (Score:5, Insightful)
You forgot to mention the most important bit of info - what state do you live in?
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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...
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Re:Strong beating up weak to save the rich...again (Score:4, Insightful)
Careful, there. You need to talk to a tax accountant before you get audited. Is $40k reasonable pay for the services you perform on behalf of the corporation? What would someone performing your job get paid in a traditional salaried role?
An acquaintance of mine does tech support in the fashion industry in NY. He got busted by the IRS for doing exactly what you're doing, and had to pay penalties, plus FICA on the difference, and he had to convert the S-Corp into a C-Corp instead (so then he had the joys of paying corporate income tax, paying dividends to himself, paying capital gains on the dividends, and paying income tax & FICA on his salary).
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Re:Use Tax (Score:4, Funny)
But have you ever physically left your state, bought something, and brought that something back home with you?
This is Slashdot. I thought most of us have never physically left our Mom's basement.
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Re:Use Tax (Score:4, Informative)
It is unrealistic for every company to figure out what sales tax applies in every state, that is why there is a company that does it for you: Vertex [vertexinc.com]. I recently worked on a project to implement this software for a large retailer. Amazon has far more technical knowledge than the average bricks and mortar retailer, this is no reasonable excuse as to why they cannot pay local sales tax. It is long past time for the online retailers to start paying sales tax just like every other business.
Not having to pay sales tax is one of my primary reasons that I often buy products online. Online retailers already have a lot of advantages for many types of products, there is no reason that they should be subsidized over local retailers.
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Re: (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 gettin
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.
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Re: (Score:3, Informative)
Re:Use Tax (Score:4, Informative)
Counties and cities have their own sales taxes, so a state lookup or even a zip code lookup wouldn't cut it. You'd need to know what municipality the buyer is in, then get state, county, and municipality tax rates.
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Re: (Score:3, Informative)
Re:Use Tax (Score:5, Informative)
Try 100K. We get a monthly update of 100K records.
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Re:Use Tax (Score:5, Informative)
I call BS anyway. There are only 50, is it too much to have some schmoe simply look the damned tax up on a sheet of paper? WTF?
If only it were so simple. The US sales tax system is a byzantine mess. You have state taxes, city taxes, transit authority taxes, public improvement fees, etc which apply based on where the sale occurred. That is the easy piece though. The difficult part is that the tax rates themselves can be different based off the products. Some products are taxable in one state but not in others. A simple example is plain bottled water which is pretty much untaxed everywhere, and flavored bottled water which is taxable in most states. Then you have tax free holidays where a certain class of products are tax free for 3 days (typically back to school), but it is a different set of days for different areas of the country of course.
To top all that off, cities, states, etc are constantly changing the rules as to which products are taxable and which are not. It is a real pain in the a** to deal with, but all of the national retail chains have to deal with it, so why can't Amazon and the other online retail companies? The best case would be to just have a national sales tax that is the same everywhere instead of the current stupid system. Instead of forcing companies to devote millions of person hours to figuring out what taxes to pay, people could actually be doing something productive.
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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.
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Re:Use Tax (Score:5, Insightful)
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Consumer's fault, not Amazon's (Score:4, 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...
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Re: (Score:3, Informative)
Taxes are good... (Score:5, Funny)
If there is an article about virtues of taxes on Slashdot, you can bet, it was posted by kdawson...
Just saying...
Re:Taxes are good... (Score:4, Insightful)
If Amazon wants to use state provided infrastructure and national defense, they should pay their share of the financial burden.
Their employees and shareholders already pay their share. I know that punishing "big business" is politically popular right now but in the end corporate taxes are nothing more than a hidden tax on individuals. The business will just raise prices to compensate for the taxes that are imposed on it. The end result is that individuals wind up paying the taxes but it's politically popular because some jackass politician can say that he's being tough on "big [insert boogieman of the day here]".
The sad thing is that people eat this stuff up hook, line and sinker.
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Re:Taxes are good... (Score:5, Insightful)
I see you included national defense in there as well. Since there is no national sales tax then Amazon already pays all the taxes that would contribute to national defense through federal corporate and income taxes, just like everyone else.
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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.
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.
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Legally due (Score:5, Insightful)
alternative (Score:5, Insightful)
I'd like to propose an alternate solution
I know, most politicians won't go with it, but here it is: How about cutting spending, not only making the additional revenue unnecessary, but enabling the cutting or even elimination of many taxes and "user fees?"
Amazon vs. Pirate Bay (Score:5, Insightful)
Paying sales-tax is the buyer's responsibility. The seller is merely charged with helping the State collect. I find it worryingly hypocritical of kdawson — and people like him — to accuse retailers like Amazon of "depriving" States of sales taxes, while defending pirate bays and napsters against charges of piracy, in which the end-users engage.
Maybe, this is because Amazon's stand harms the Government, while the napsters harm private enterprise?
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.
Re:The simple solution.... (Score:4, Insightful)
Parent
Taxes, taxes, taxes (Score:4, Insightful)
To look at this another way, perhaps Amazon's 5-10% price advantage will pressure the states to drop their sales tax for the sake of local businesses. This is completely feasible - Alaska, Delaware, Montana, New Hampshire and Oregon already have no sales tax.
The money that consumers use to purchase goods was already taxed, twice. First the government taxes their income, then the state takes a slice too. Do we really need to tax people's money as it goes into the wallet AND as it goes out?
Re: (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:Taxes, taxes, taxes (Score:4, Insightful)
Taxes pay for very important things.
Unfortunately they also pay for a buttload of useless waste.
Parent
Re:Taxes, taxes, taxes (Score:4, Insightful)
If taxes have to be raised, then raise the income taxes or property taxes. Sales taxes are a pain to collect, and they have a dampening effect on retail businesses. Also, they are skewed against the poor, since poorer people typically must spend a higher percentage of their income on retail goods.
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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!
States should fix this in their own laws (Score:3, Insightful)
Just stop using sales tax. Most states already have income taxes of some kind, it's a simple matter of ratcheting down sales tax until it's eventually zero and ratcheting up income tax.
Sales tax is unfair because it's a regressive tax. It's base on how much you buy, not how much you make, and the poor are taxed more percentage wise than a rich person. A $20 shirt with 6% sales tax costs the same if you make $10,000 vs if you make $1,000,000. Income tax is the fair way to go.
**Commence flames from the other side of the political spectrum**
Government on the attack (Score:5, Insightful)
Then stop attacking the local retailers with taxes.
Re: (Score:3, Insightful)
Mazerov can bite me (Score:3, Insightful)
The sales tax is almost 10% where I live. Up yours, Mazerov, and three cheers for Amazon. And here's hoping a meteor hits Sacramento.
Re:The problem with "legal" taxation (Score:5, Insightful)
The only problem with your conjecture is that the public want their government-provided goodies which cost money. Money that the government gets through taxation.
BTW, before that "tea party" you mention ever happens, it is much more likely that the U.S. government will not be able to continue to sell its debt, resulting in hyper-inflation of the dollar and a collapse of the U.S. economy and probably of the U.S. government.
If you do not understand how and why hyperinflation will occur, you need to go read a book on economics.
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