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The Almighty Buck The Internet News

Every Day's a Tax Holiday At Amazon 377

theodp writes "With Black Friday here, Slate's Farhad Manjoo reminds readers of how Amazon.com undersells Best Buy, the Apple store, and almost everybody else. Read his lips: no sales taxes. Unless you live in KS, KY, NY, ND, or WA, you'll pay no sales tax on many purchases from Amazon, giving Amazon a huge — and largely hidden — price advantage over most other national retailers. Amazon CEO Jeff Bezos is certainly no fan of taxes — he explored founding Amazon on an Indian reservation, and recently ponied up $100,000 to defeat a proposed WA state income tax, a good investment for someone who's cashed in close to $800,000,000 in Amazon stock this year alone. So, is Amazon's tax-free status unfair? Of course it is, says Manjoo. Amazon has physical operations in 17 states in which the company and its employees enjoy the fruits of local taxes — police and fire protection, roads, hospitals, and other infrastructure that make its operations possible. Yet Amazon skirts tax collection in most of these places through clever legal tricks."
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Every Day's a Tax Holiday At Amazon

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  • by wakim1618 ( 579135 ) on Friday November 26, 2010 @09:19AM (#34349348)

    Each state in which Amazon is located also benefits from the jobs, both direct (employed by Amazon) and indirect (e.g. transport services and power generation) which Amazon pays for. These workers in turn pay income taxes and sales taxes (when they purchase goods and services) which pay for the roads and infrastructure. Corporate and sales taxes directly paid by the company are usually not the primary means by which a company contributes to a government's tax revenues. It may well be argued that if Amazon is expected to contribute towards its consumption of infrastructure, then it should be some of its taxes back in many states.

  • by Dionysus ( 12737 ) on Friday November 26, 2010 @09:22AM (#34349368) Homepage

    don't all those companies that Amazon competes against elso provides jobs to workers who "in turn pay income taxes and sales taxes (when they purchase goods and services) which pay for the roads and infrastructure"?

  • by garcia ( 6573 ) on Friday November 26, 2010 @09:22AM (#34349370)

    From the article:

    Technically, then, if I buy a $1,000 laptop from Amazon, I'm supposed to pay a $90 use tax when I file my taxes to my home state of California at the end of the year. I've never done this, and I bet you haven't either--almost nobody does, because states have no good way to enforce use tax collection.

    Then stop whining about the lack of sales taxes. The taxes should be borne by the customer of Amazon, not Amazon (at least in the states in which it does not have a physical presence and no, affiliates are not physical presence no matter how bad the states want it to be). The government knows better than to enforce those taxes upon the citizenry as it only causes a minor inconvenience on a single online retailer, 300 million people are likely to be a lot more upset.

  • by resistant ( 221968 ) on Friday November 26, 2010 @09:25AM (#34349386) Homepage Journal

    I've always wondered why when irate brick and mortar retailers yell about an "unfair advantage" with no sales tax, they invariably fail to mention shipping costs, which don't exist for direct in-person brick and mortar store purchases. Admittedly, Amazon (for example) these days has free shipping for many orders of $25.00 or over, and intense competition over the past few years has put great pressure on all on-line retailers to not play games with charging excessive shipping fees to pad their profits, which used to be a huge problem.

    Frankly, I gloat over not having to pay sales taxes (when possible). That's the free market. Amazon certainly has no moral obligation to levy sales taxes if there's no direct legal obligation to do it. It's up to the individual states to decide how badly they want to drive out business or attract it with varying tax treatment.

  • by ukyoCE ( 106879 ) on Friday November 26, 2010 @09:30AM (#34349416) Journal

    Neither Best Buy nor Amazon include sales tax in their advertised prices. Yet Amazon's (and Neweggs, and etc.) prices are typically discounted 20% or more compared to the brick and mortar stores. Even after accounting for shipping. I don't think lack of sales tax is why people pick Amazon and Newegg.

  • Blame the thief. (Score:1, Insightful)

    by Anonymous Coward on Friday November 26, 2010 @09:31AM (#34349420)

    Blame the thief who steals from you, don't blame your friend because he was smart enough to hide his wallet in his sock.

  • by Tensor ( 102132 ) on Friday November 26, 2010 @09:37AM (#34349442)
    So do you believe that merchandise magically appears at a brick&mortar shop ?
  • by arkane1234 ( 457605 ) on Friday November 26, 2010 @09:41AM (#34349460) Journal

    it's more of of a situation of the shipping price being added on previous to purchase at brick & mortar, versus like sales tax after purchase.

  • Bait and switch (Score:4, Insightful)

    by Dunbal ( 464142 ) * on Friday November 26, 2010 @09:43AM (#34349484)

    in which the company and its employees enjoy the fruits of local taxes — police and fire protection, roads, hospitals, and other infrastructure that make its operations possible.

    And I am sure that those employees pay their federal, state and municipal taxes, as well as sales taxes on just about everything they buy... I'm sorry what was your point again?

    Ahh yes, the shameless grabbing of money by idiotic governments so addicted to spending that even the bonds they issue are worth little more than junk. Shame on you. Instead of reaching your hands out for more money like spoiled children, how about making real efforts to cut spending.

    There's a law of nature - the more you try to tax, the less money you actually get. People and companies eventually move - out of state, or out of country. It's a simple decision - if the cost of moving is less than the cost of taxes, we move. Careful when you raise the cost of doing business. All the rules, regulations, by laws, and other problems associated with employing people in the US is what is driving business offshore (where things are SIMPLER) to begin with. I really don't see what exactly is anchoring a global company like Amazon specifically to the US. A plunging US dollar may be "good for exports", but it means that the line in the income statement that says "Income from the USA" is actually worth less and less every year.

  • by Jenming ( 37265 ) on Friday November 26, 2010 @09:46AM (#34349502)

    Not collecting sales tax to make up for shipping costs amounts to a government subsidy on shipping. Maybe thats a good idea, but its not the free market at work.

  • by Lincolnshire Poacher ( 1205798 ) on Friday November 26, 2010 @09:47AM (#34349506)

    > So, is Amazon's tax-free status unfair?

    Amazon.com Inc may have "tax-free status"...

    Amazon.co.uk Ltd, Amazon.de GmBH and Amazon EU Sarl most assuredly do not, yet we Old Europeans still shop there.

    It's about the long-tail of products in the range, not prices. A lot of the items in the Amazon catalogue aren't even available through high-street shops, so what difference would a few dollars more make?

  • Re:There is always (Score:1, Insightful)

    by JasterBobaMereel ( 1102861 ) on Friday November 26, 2010 @09:50AM (#34349518)

    This is not a problem caused by Amazon .. it's a problem with the outdated tax laws in the US

    If you buy a song from iTunes do you pay sales tax or use tax on it ? It has not physically moved, it was purchased from a website, hosted in one place, downloaded from a website hosted elsewhere, bought from a company with presence in various states and who has headquarters in another, who do you owe tax to ? ..or perhaps you could wake up to the fact that you are one country and have uniform tax laws ...?

  • Re:BS (Score:3, Insightful)

    by antifoidulus ( 807088 ) on Friday November 26, 2010 @09:54AM (#34349538) Homepage Journal
    u know unfirable state employees who get paid significantly more than private sector equivalents, retire early and have vast pensions

    Conservatives love to tout this fact, but if you actually look at the reasoning behind it, it isn't that government employees are getting paid a lot more than they used to, it's that private sector wages have been slashed mercilessly in the past 30 or so years to the point that even though government employees don't make that much more, adjusted for inflation, the ratio between private to public sector salaries has fallen significantly.
  • by 140Mandak262Jamuna ( 970587 ) on Friday November 26, 2010 @10:06AM (#34349608) Journal
    If a small mom and pop restaurant or a minor retailer is forced to collect taxes internet companies should be asked to collect taxes too. The idea of multiple jurisdictions, exempted products etc are lame excuses. All these people coming out of the wood work cheering on this multi billion dollar corporation shafting tiny jurisdictions out of their meager sources of revenue go suddenly silent when there is a media frenzy urging the government to do something. Some wild fire in the prairie, Govt should airlift water using helicopters to douse it. Oil gushing from a well in the gulf, the govt is expected to boom thousands of miles of coast line. But the moment the crisis is over well funded anti-tax shills shout about govt inefficiency govt stupidity and cheer mega multi-billion multinational corporations tax evasion.

    Whatever is the tax rate, we can not have one rule for one set of businesses and another for another set. Govt should not be biasing the field, it should not be picking winners and losers. By forcing off-line merchants to collect sales tax while exempting on-line retailers government is creating a non-level playing field. That is reason enough to be force the on-line guys to play by the same rules.

  • by deapbluesea ( 1842210 ) on Friday November 26, 2010 @10:16AM (#34349696)

    I've lived in 5 states in the last seven years, according to Farhad, I've "enjoy[ed] the fruits of local taxes — police and fire protection, roads, hospitals, and other infrastructure that make its operations possible". Guess what, I pay those local taxes in the form of sales tax on everything I buy. I'm currently helping to prop up the state of California with my hard earned dollar (and you wouldn't believe the cut in quality of life I had to take when I was assigned here).

    The argument Farhad should be making is that those states are not benefiting from sales taxes on Amazon purchases. By talking about services paid for by local taxes (not sales taxes), he's getting muddled. But let's analyse that argument too. If states are benefiting from sales taxes paid by an out-of-state customer, then they would essentially be stealing from the state that customer lives in. The money that would be collected by, for instance, Kentucky, on each sale Amazon makes is money that would have been collected in the purchaser's state had they bought locally. In fact, to boil this down to a zero sum game is stupid. I don't simply bury the money I saved from buying at Amazon. Instead, I take my wife to the movies, go out to eat, maybe invest it. Each of these activities results in a business making a profit, which means a job is created or saved (to use a completely useless metric), and someone, somewhere takes a cut of that money in taxes.

    Farhad simply lacks a broader perspective. It seems he'd rather complain about a company's success than understand how that success benefits the economy as a whole, which ultimately benefits him as well.

  • by samriel ( 1456543 ) on Friday November 26, 2010 @10:19AM (#34349712)
    So the rest of those companies go out of business, and their employees have to work at Amazon. You get less choice when you buy stuff online, so Amazon gets more money, so it can destroy other businesses, and hire more employees...

    Isn't the free market great?
    </sarcasm>
  • by Belial6 ( 794905 ) on Friday November 26, 2010 @10:42AM (#34349848)
    Honestly, the whole practice of even calling it "online" sales is a misnomer that confuses the argument. "Online" sales have existed long before "Online" existed. "Online" sales ARE mail-order sales. Arguing about Amazon mail-order is no different then arguing about people buying mail-order in 1900. Just as with everything else, "On a computer" does not make mail-order some completely new thing that is somehow magically different from what has been going on for the last 100 years.
  • by Anonymous Coward on Friday November 26, 2010 @10:49AM (#34349892)

    So do you believe that merchandise magically appears at a brick&mortar shop ?

    just as magically as it appears at Amazons warehouses.

  • by Rockoon ( 1252108 ) on Friday November 26, 2010 @10:50AM (#34349902)
    I can't believe that nobody has mentioned this yet.

    The issue at hand is taxation without representation. If California was to collect sales taxes from a retailer in Connecticut who sells remotely to Californians, then neither that retailer nor its employees would not have representation with regards to those tax laws.

    The slippery slope is that California could effectively create predatory taxation on out-of-state businesses without those out-of-state businesses having any representation.
  • by Belial6 ( 794905 ) on Friday November 26, 2010 @10:50AM (#34349908)
    It is an unlevel playing field that has existed for over 100 years, and the brick and mortar stores have dominated most markets. That might not invalidate your argument, but it is a factor that people seem to conveniently ignore.
  • by Ichijo ( 607641 ) on Friday November 26, 2010 @10:56AM (#34349952) Journal

    It's quite simple. Eliminate the state sales tax.

    Yes, it means the state might have to raise any fee that doesn't already cover the cost of the government service it's supposed to pay for. And the state might also have to raise the income tax, but that's a progressive tax.

    So eliminating the state sales tax will make local businesses more competitive with Internet retailers while also eliminating a regressive tax. That to me sounds like a good deal for everyone.

  • by Anonymous Coward on Friday November 26, 2010 @11:05AM (#34350018)

    The emergency services you mentioned are provided by the U.S. federal government, which does not collect sales tax.

  • by rolfwind ( 528248 ) on Friday November 26, 2010 @11:07AM (#34350044)

    Apt Tax.

    http://www.apttax.com/ [apttax.com]

    It's the only semi-progressive tax I see just from treating people fairly all transactions at the same rate - meaning it will hit million dollar stock trades (at $6k) just as much as the guy buying a $100 piece of furniture ($0.60).

    All other taxes I see are rather unprogressive. The poorest used the biggest amount of income for daily needs and so sale's tax hits them hardest. Fica is capped at 120k income (or something like that) - that's a staggering 15% of your income (and let's be honest here, if the employer is paying half, he's just figuring so much less from your pay and poor self-employed people pay the 15% all by themselves. Etc, etc, etc.

    The only semi-progressive tax is income tax and even that is so riddled with loopholes that it's the middle and upper middle classes that get screwed, the rich can afford to pay for good advice on how to structure.

    And since it's deemed $$$==free speech, the rich will always make sure politicians keep it this way. And I'm not talking about rich individuals necessarily, rich corps are the real culprits and since everyone does it, they somewhat owe it to their stockholders to do it as well.

    And while it's nice that Bill Gates and Warren Buffett donate to charity, most of it goes to 3rd world countries which they do because it helps the most people per dollar, honestly a big chunk should have gone back to the country (people) that helped them build up in the first place.

  • by noidentity ( 188756 ) on Friday November 26, 2010 @11:07AM (#34350048)

    So do you believe that merchandise magically appears at a brick&mortar shop ?

    Do you believe that shipping 100 widgets on a single truck to a single store costs anywhere close to shipping 100 widgets individually to 100 people's doorsteps?

  • Re:There is always (Score:2, Insightful)

    by corbettw ( 214229 ) on Friday November 26, 2010 @11:19AM (#34350138) Journal

    or perhaps you could wake up to the fact that you are one country

    Anyone who thinks the US is one country doesn't understand our situation. The US is a collection of independent states, not provinces. Admittedly, since the Civil War the states have been less independent of each other than previously, but our federal system is more analogous to the EU than to Canada.

    Not to mention, the problem of runaway government spending at the Federal level would only be made worse if they imposed a sales tax on everyone. Your solution would cause more problems than it solves.

  • I don't think lack of sales tax is why people pick Amazon and Newegg.

    Indeed. I'd pay Newegg an extra 20% not to have to deal with the hassle of Best Buy. At least I can return defective stuff to Newegg without having to threaten a manager, and I'm honestly surprised that Best Buy hasn't installed TSA-style scanners so they can enhance their "I just watched you pay for this but I'm going to treat you like a shoplifter anyway" experience.

  • by OFnow ( 1098151 ) on Friday November 26, 2010 @11:49AM (#34350380)

    ...means obeying the laws the legislators actually wrote?

  • by Rockoon ( 1252108 ) on Friday November 26, 2010 @12:00PM (#34350448)
    You are focusing on the tax amount and who pays it.

    Tax laws deal also impose rules on the Collection of those taxes.

    It is that process which is at issue. The California Legislature writes laws regarding that process for which the Connecticut business is not represented, and it isnt hard to imagine that the process could be discriminatory against out-of-state businesses.

    This is why it is up to the citizen to make sure that the tax is paid on out-of-state commerce, and not the business.
  • by misexistentialist ( 1537887 ) on Friday November 26, 2010 @12:01PM (#34350464)
    Chains like Walmart already devastated local business before Amazon got a chance to.
  • by Anonymous Coward on Friday November 26, 2010 @12:20PM (#34350584)

    Nobody mentioned it because it's a non-issue and you're confusing things you heard in civics class. States cannot tax interstate commerce because it's under federal jurisdiction.

    "Taxation without representation" is more along the lines of what citizens of D.C. face: they pay federal taxes and yet they have no voice (no votes) in the federal government.

    "businesses [not] having any representation"... say what you will about Citizens United, businesses *don't* have representation as businesses (even corporations) do not vote.

  • by Fjandr ( 66656 ) on Friday November 26, 2010 @02:19PM (#34351448) Homepage Journal

    This is the only comment that needed to be posted for this story. The arguments here are rehashing stuff that was settled years ago. Some of that was settled correctly, some not.

    States that charge use tax on out-of-state purchases exercise power which is clearly and specifically denied them by the US Constitution's Interstate Commerce Clause, which gives sole authority to do such things to Congress. People failing to report the purchases may be committing a crime, but they are certainly not doing anything wrong.

  • by Maxo-Texas ( 864189 ) on Friday November 26, 2010 @05:13PM (#34352868)

    It's about efficiency gains.

    What used to take 100 sales clerks to provide, can now be done by 0 sales clerks.
    What used to take 100 separate warehouses, now takes 0 warehouses (direct from vendor shipping).

    Previously, those 100 sales clerks would have found other work, some might have retired, a few would have failed/died/turned to crime.
    The warehouses might have found other uses, or decayed (both happened).

    I think this is a paradigm shift tho.

    Most of the 100 sales clerks will not find other work. Jobs for manual labor type work are going away without replacements.
    Jobs on the top end (less manual) are also going away (offshoring).

    I think we could see over 30% unemployment within 2 decades. That would have significant effects on what our society votes as "reasonable".

  • by Dutch Gun ( 899105 ) on Friday November 26, 2010 @06:51PM (#34353660)

    I doubt you can get away from basic economic reality that easily. I'd imagine that if only corporations are taxed instead of people, they'd have to make up the difference in cost. That means either cutting costs in some way (layoffs are the simplest), or raising prices.

    It's the same sort of logic people use when trying to tax the rich. Unfortunately, the rich (and upper-middle class) are the entrepreneurs and venture-capitalists, and tend to be job creators. If you try to tax them, they end up working to just preserve their own capital instead of investing it back into the economy where it does the most good. It's quite simple - if you remove the potential reward, it's not worth the risk of investment.

    When you siphon off money from the economy via taxes, it doesn't really matter where you take it from. It all has the same negative drain on the economy.

  • by CastrTroy ( 595695 ) on Friday November 26, 2010 @09:18PM (#34354872)
    The problem is that you had people doing jobs that are unskilled. If your job could be done by the average kid in high school, you should really should rethink your career path. Long gone are the days where you could go work for the local factory and work there your entire life. People are capable of much more, but for the most part, they aren't living up to it because there was always an alternative. Most people are lazy and will take the unskilled labour route if it means they can pay the bills. Once that path does not exist anymore, and the options consist of "live on the street" or "learn how to do something useful" you'll see a lot more people doing useful stuff.
  • by sumdumass ( 711423 ) on Friday November 26, 2010 @10:39PM (#34355398) Journal

    All corporations are owned by natural people. The founding fathers were capitalists and all owned some sort of business of their own. Stop trying to contradict history in order to remake some fictional world that suits your ideals better.

I've noticed several design suggestions in your code.

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