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Every Day's a Tax Holiday At Amazon 377

Posted by samzenpus
from the one-cick-loophole dept.
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"?

      • Re: (Score:3, Insightful)

        by samriel (1456543)
        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>
        • Re: (Score:3, Insightful)

          Chains like Walmart already devastated local business before Amazon got a chance to.
        • 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 CastrTroy (595695) on Friday November 26, 2010 @09:18PM (#34354872) Homepage
            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.
      • Re: (Score:3, Informative)

        by AmberBlackCat (829689)
        Around here, Wal-Mart, Sprint, and I think Harley-Davidson all got tax breaks for locating a "brick-and-mortar" store in this area. Something about luring businesses to stimulate the economy or employment. So they're getting tax breaks online businesses don't get.
    • Re: (Score:3, Informative)

      by anguirus.x (1463871)

      These workers in turn pay income taxes and sales taxes (when they purchase goods and services) which pay for the roads and infrastructure.

      Well, if they buy stuff from Amazon they don't pay sales taxes, which is exactly the point, son.

    • by mrsquid0 (1335303)

      You seem to be saying that a business's employees and customers should be paying for the government services that the businesses use.

      • by j0nb0y (107699)

        You seem to be saying that employees and customers don't *already* pay for government services that businesses use.

        • by mrsquid0 (1335303)

          Well, your taxes are already paying for the government services that I use, so why do I need to pay any taxes when you are already paying them for me? I would be very happy if j0nb0y paid my share of the taxes on the various services that I use.

    • 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.
      • It is the Californian who would be paying those sales taxes, not the business (for in-state transactions businesses are simply required to collect the taxes). Right now, if a Californian buys something from a retailer in Connecticut they are still required to pay those sales taxes; since the business didn't collect them and turn them over to the government on the Californian's behalf, s/he has to personally pay it on tax day along with everything else. Of course, almost nobody does that...
        • 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 jonbryce (703250)

        You could argue, as most of the rest of the world where there is VAT rather than sales tax, that customers pay the tax, and they have the votes. Californian companies in any case don't get votes in California or elsewhere. Combine that with tax discrimination laws so that California can't tax Californians differently from citizens of other states, and I don't see any problem.

      • by Trepidity (597) <delirium-slashdot@h a c k i sh.org> on Friday November 26, 2010 @03:08PM (#34351798)

        That isn't the issue here. If you read the article summary, the issue is Amazon not collecting sales takes in states where they actually operate and have employees.

        They're doing that via some ridiculous loopholes, which I'm surprised actually stand up to scrutiny. The main one is that they claim many of their warehouses aren't actually "Amazon" warehouses, and the employees aren't "Amazon" employees, because they're owned and operated by subsidiaries. Their Texas operations, for example, are owned and operated by Amazon.com.kydc, Inc., which they assure you is not the same business as Amazon.com, Inc., so they don't collect Texas sales taxes.

    • Why don't we look at things from the other perspective? Why should the workers pay taxes, when they already contribute to the income of the corporation they work for, which can then be taxed.

    • Re: (Score:3, Informative)

      by clintp (5169)

      Amazon's generating a lot of taxes revenue for those states, just not in direct sales taxes:

      Amazon pays property taxes on the warehouses it owns/leases.
      Amazon pays fuel taxes for the trucks it uses to cart that stuff around.
      Amazon pays the employer portion of payroll taxes (state worker's compensation, employer-paid portions of state income taxes, and a host of other crazy employer-paid taxes and fees you would not believe)

      Plus, there's all of the taxes the workers are paying:

      The workers pay income taxes an

  • The employees enjoy the fruits of local taxes because they pay their taxes and pay sales tax on all things bought locally. The ones who are not paying are the citizens of those 17 states that buy @amazon, not its employees.
    • Relevance (Score:4, Informative)

      by fyngyrz (762201) on Friday November 26, 2010 @10:07AM (#34349614) Homepage Journal

      There are no sales taxes in my state. Trying to argue that Amazon is "ripping off" anyone seems like the wrong argument. On the other hand, states with sales taxes... now there one could make a good argument for ripping people off. Especially considering how far out of constitutional compliance most states are (just following the feds, I know.) As for roads, isn't that typically part of fuel taxes, a use tax, more or less?

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

    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 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 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.

    • Re: (Score:2, Insightful)

      by Tensor (102132)
      So do you believe that merchandise magically appears at a brick&mortar shop ?
      • Re: (Score:3, Insightful)

        by arkane1234 (457605)

        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.

      • Re: (Score:3, Insightful)

        by Anonymous Coward

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

        just as magically as it appears at Amazons warehouses.

      • 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?

    • by thijsh (910751) on Friday November 26, 2010 @09:42AM (#34349466) Journal
      The shipping cost are negligible compared to the rent of a store on a prime location. This has given online retailers an advantage from the first day an online store opened it's doors, so to speak... This saves them so much cost compared to the brick and mortar retailers that they can sell products for a lower price and deliver it to you in one day for free and still make more money than retailers do. The advantage is and has always been with the online retailers and the only way brick and mortar stores can compete is with service, and playing on peoples feelings because most people still prefer to be able to talk to someone in person, ask questions and feel the product they are buying (and are willing to pay a little extra for that). Both on- and offline stores have advantages, nothing special about that.

      The sales tax is a whole different matter, it does create an unfair advantage because Amazon just shifts responsibility for the tax to the end customer. It has to be payed anyway they just don't because, supposedly, it's a hassle to figure out to who... It's tax-evasion and the larger the company the more accepted it is... It has come to the point that the largest companies with the greatest income pay the least amount of tax (percentage that is), that is the underlying unfair advantage that will eventually result in monopolies.

      Smaller companies pay more tax => Unfair advantage for the big companies => Monopolies in the long run => The bill for the customer (whether in money, service or quality)...
      • by chrb (1083577)

        The shipping cost are negligible compared to the rent of a store on a prime location. This has given online retailers an advantage from the first day an online store opened it's doors, so to speak...

        That is true, however, that is not the main point of this article. The author of the article is comparing the cost of an identical purchase via online sites - apple.com versus bestbuy.com versus amazon.com versus walmart.com. Even if Apple and Best Buy and Walmart etc. have physical stores at prime locations, their online operations should be more cost efficient, since they can ship direct from huge out-of-town warehouses instead of having to pay for prime location rent in the middle of a city. This should,

      • 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 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 Rich0 (548339) on Friday November 26, 2010 @11:05AM (#34350016) Homepage

        It has to be payed anyway they just don't because, supposedly, it's a hassle to figure out to who... It's tax-evasion and the larger the company the more accepted it is...

        No, it is called the interstate commerce clause. You know, that clause of the constitution that usually causes people to pay more in taxes and deal with more government intrusion. It turns out that in this particular case it makes sales taxes on items purchased in other states illegal, which is why you don't have to pay tax on purchases across state lines.

        Now, states do try to charge a "use tax" on items purchased in other states. This is of course flagrantly in violation of the constitution since it is just another name for a sales tax, and you have to pay it even if you never use the purchased item. However, courts have upheld it, and so you could potentially be punished for not paying this unconstitutional tax, assuming somebody manages to figure out how to bill you for it and survives the backlash.

        • by thijsh (910751)
          I guess the states confuse things a little... There are a lot of strange legacy laws that make things more complicated in the US. But what happens with interstate commerce also happens with international commerce on a larger scale.
          It illustrates my point that a company like Amazon is not sticking out for it's customers but only trying to maximize profit and minimize tax to the point that they don't pay any taxes at all... Which is not so far out when you see the strange tax evading schemes some companies e
      • by jejones (115979)

        Then let's get rid of that advantage--states should get rid of the sales tax.

      • There are advantages that local stores have always had that online stores have not.

        The biggie has always been convenience. If I have to have (or merely just want) something right now, Amazon and other online retailers are not an option. Also, if I'm looking for, say, a new keyboard, I can't really see it, touch it, feel it, find out if I'm going to like it from an online store unless I suck it up, buy it, and hope for the best. And of course, customer service for things like exchanges and returns is much

    • 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 Dunbal (464142) *

      they invariably fail to mention shipping costs, which don't exist for direct in-person brick and mortar store purchases.

      While you're right, you neglect to mention the (hidden) cost to a customer of driving to a store and back - there's gas, oil, wear and tear on the car, etc. Then there's the time factor. Usually walking back and forth across a parking lot and store and hunting down the thing you want to buy takes a lot longer than a couple mouse clicks. All of that has a cost - you co

    • by iritant (156271)

      Of course shipping costs exist for brick and mortar purchases. It's just that they are borne by the brick and mortar store. By the way, depending on where you live, you may be violating state law by not paying the sales tax in your state when Amazon doesn't pay it for you.

    • by gutnor (872759)
      They save on shipping cost, but need to pay for staffed physical shops in various expensive place (downtown, expensive mall, ...) . On the other hand they have a physical window, while the amazon has not. That's competition, their idea against the other idea.

      Taxes on the other hand is State vs State competition and not in their control. Now with internet, mail-order companies have turn into serious competitor, so that becomes more and more problematic to their business model and they complain more loudly.

    • Re: (Score:3, Informative)

      by TapeCutter (624760) *
      "Amazon certainly has no moral obligation to levy sales taxes if there's no direct legal obligation to do it"

      Yep, that's it in a nutshell. It reminds me of a wealthy bussinessman here in Oz called Kerry Packer who was dragged in front of a senate inquiry into media ownership laws. Check out his response to one of the seantors starting from about 7:25 in this video [youtube.com].
    • by Duradin (1261418)

      Brick and mortar stores have the advantage of instantly fulfilling the customer's order.

      I pay Amazon extra to have basic shipping be upgraded to 2 day with a fee per item if I want it in 1 day. There's no option for instant. If I need something now a brick and mortar store gets my business.

      Now living in the middle of nowhere with the closest shopping area doing everything they can to not carry anything means I order online for just about everything nonperishable. Even if I did want to shop locally I'd have

    • Many years ago, before Amazon was such a dominant player, they introduced free shipping for orders over $25. This was a very big deal back then. It had been virtually unheard of before. Amazon made a choice to forgo traditional advertising and use their advertising budget to give their customers free shipping.

      Amazon refused to charge us the (so far) totally optional advertising tax that the all the other retailers in the article are charging us for. I don't know if Amazon has changed there (low/no) ad

  • 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.

    • I think increased competition is the reason for those lower prices. Let's say you're in the market to buy a computer. There are maybe a handful of stores in your local area that you could go to to buy one. Those stores will have different manufacturers and models and price comparisons will be tricky (involving a lot of driving back and forth). Now, let's look at the online world. I can load up Amazon.com, NewEgg.com and a dozen other online shops in one browser window. I can look through the selection

    • 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.

      For the big ticket items...you better believe it is the reason. Used to live in Arizona where the sales tax was almost 9%...with the legislature doing everything they could do to keep it rising to 10% or better. Don't feel sorry for any brick/mortar business who says they can't compete. They refuse to do so...because in many small towns they can't AND the owners love their big homes/expensive cars.

      In the town where I used to live in Arizona...no place (including the only big box store from Arkansas in th

      • by ukyoCE (106879)

        In my area sales tax is down around 5%, but if I go into the city it jumps to something like 12% (at least for restaurants). Seeing $0.25 added onto your $5 taco bell purchase is one thing, seeing $0.60 added makes you stop and think about cross the city line to get those tacos.

        Regarding online retailers though, as long as the selection is better and prices are 20% cheaper to begin with, not paying sales tax is just icing on the cake.

        • In my area sales tax is down around 5%, but if I go into the city it jumps to something like 12% (at least for restaurants).

          At least living in Idaho now...the sales tax is 6% everywhere. None of this BS 6% for the state...3-4% for city/county.

          as long as the selection is better and prices are 20% cheaper to begin with, not paying sales tax is just icing on the cake.

          Very true. Of course...if the states/cities/counties had never gotten hooked on the sales tax in the first place...this would have never happened. The biggest problem is that the governments have no problem giving OUR taxes away to any/all businesses...but when the citizen wants the same deal...it's not right.

          What's even sadder is this never used to be an issue years ago when the one of

    • by MistrBlank (1183469) on Friday November 26, 2010 @10:59AM (#34349972)

      I live in New Jersey where I "enjoy" a 7% sales tax on NewEgg orders for the last 5 years or so since they built the Edisson warehouse.... they're still cheaper than anywhere else. You're completely right that it's not a factor. On top of that, most of my orders arrive NEXT DAY, even when I take the free shipping options that are supposed to be 3-5 days and NewEgg's support has always been nice to me for close to 10 years now. That is the reason I keep coming back.

    • Re: (Score:3, Insightful)

      by Just Some Guy (3352)

      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.

  • There is always (Score:5, Interesting)

    by kilodelta (843627) on Friday November 26, 2010 @09:36AM (#34349440) Homepage
    The little fact that the power to tax interstate commerce is the exclusive domain of the FEDERAL government. Not the states. That's why Amazon can skirt most state use tax laws.

    I live in a state that requires me to report anything I bought outside the state or online via a USE tax. I'm waiting for someone to buy something but never use it and let the state prosecute. them. I bet that stupid voluntary use tax would be dropped post haste.
  • 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.

    • That simplicity you speak of is because they allow slavery to a business. Who cares if the people die, we've got money to make!

      If they can't get their products in, it won't matter. Customs can always reject them and anyone who tries to pass them off as something else.

      Never mind that the US has quite a fine military and a very good intelligence department. There's nowhere to run or hide anymore, should you be a large enough thorn in their side. And plenty of citizens will thank them for doing their job a

    • Re:Bait and switch (Score:5, Interesting)

      by 10101001 10101001 (732688) on Friday November 26, 2010 @11:30AM (#34350236) Journal

      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.

      Oddly enough, it's not that simple. For the US Federal Government, Treasury Notes are still one of the safest forms of debt to own, even though the US is obviously holding a huge debt. The reason has more to do with the risk of the US defaulting versus their ability to tax and/or grow their way out of debt. Meanwhile, a state like California has suffered from junk bond status on its debt because US states can default on their debt and California has anal laws when it comes to raising taxes yet trivial laws for increasing spending; ironically enough, California like most states has to balance its budget (ie, have no net debt*) every year (or few years, I'm not entirely sure which) so it'd seem to be much safer in the short term.

      Shame on you. Instead of reaching your hands out for more money like spoiled children, how about making real efforts to cut spending.

      Yea, that'd be the fault of voters. People say "cut spending", elect politicians on a vague platform to deal with the budget (since specifics would leave you unelectable), then turn around and vote out anyone who would actually make the tough choices and cuts spending (since it only takes a few percent of people to swing the vote and people selfishly vote on their own interests). And of course, cutting taxes** is great to get you reelected but it has nothing to do with solving a debt crisis generally.

      There's a law of nature - the more you try to tax, the less money you actually get.

      Two things. One, the Laffer Curve clearly indicates that in fact there's a range of tax rates that increasing the tax rate will result in greater tax revenue until a point; after that, tax revenue does go down. The evidence would seem to indicate the effective tax rate where tax revenue drops off is close to 50%. Two, I don't think anyone believes government should intrinsically work to maximize tax revenue; it just happens that voters keep electing for spending and that inherently requires more tax revenue to pay off.

      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.

      Perhaps in part, yes. However, the standard nd cost of living in the US (and hence the inherent minimum wage) is larger than many other countries regardless of taxes, regulation, etc; hence if the product can be shipped and shipping is cheap, then businesses will sanely offshore as much as they can. Meanwhile, sufficient demand for goods eventually raises the standard and cost of living in offshored-work countries (presuming they're capitalistic) and the value of US goods to trade (or more precisely US currency which represents the ability to buy US goods) lowers in value resulting in US goods being more attractive to produce and export.

      Of course, we have various regulations for a reason (for example, we don't like China-quality air in our cities) and people and businesses are often unwilling to move given the risks, hardship, and general dislike to leave what they view as home; besides businesses and effectively be in multiple countries at once. Let's not forget that California, even with its repetitive debt crisis, frequently mocked heavy-handed regulation, etc has the 8th largest economy of the world and represents 13% of US GDP and has about ~12.3% of the US population. So, it has slightly more GDP than one would expect for its population size and it has a large percentage of the US population even though it is trivial to move in the

      • by khallow (566160)

        Oddly enough, it's not that simple. For the US Federal Government, Treasury Notes are still one of the safest forms of debt to own, even though the US is obviously holding a huge debt.

        Oddly, the federal government itself is buying up much of that debt via the Federal Reserve. It'll be interesting to see what happens when they (and other governments such as China and Japan) stop doing that.

  • 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?

    • > 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?

      In many rural places (most of the land mass of the US)...the catalog...now online has been the only way for many people to get items they need/want. Just because Congress refused to enact tax laws...doesn't mean much of the population of the US needs to pay higher prices because some chain store believes they need to level the playing field.

      You want to do this...learn customer service and don't treat me like an annoyance while I'm in your store. Online...I don't have to look for a salesperson. I can read

    • Amazon UK avoids VAT on stuff like DVDs and CDs by shipping them from the Channel Islands. Long slightly rambling Wikipedia article about it [wikipedia.org]. In Amazon's case these items are sold by "Amazon's Preferred Merchant", Indigostarfish.com who are based in Jersey. This loophole is used by just about every other British online retailer for DVDs and CDs though...

  • by markdavis (642305) on Friday November 26, 2010 @09:57AM (#34349550)

    Just because Amazon doesn't COLLECT sales tax doesn't mean you do not have to pay it. In Virginia (and I expect most states with sales tax), you are required, by law, to list your out of state purchases each year on your income tax forms and pay the tax.

    • Here in Michigan (and presumably elsewhere as well), there's an alternative calculation for "use tax" that you can enter in that's based on your income.

      Since you're only obligated to pay the lesser of the two amounts, if you order a large amount online it's often in your best interest to just go with the calculation and forget about trying to keep track of purchases.

      (In most years, I think I've wound up paying $50-60 or so with the default amount.)

  • Its interesting to see how this affects various states' policies. For instance PA which exempts food, which is rarely bought online, from sales tax is probably losing a bigger percentage of its potential sales tax income than are states like Maryland who have a flat sales tax. I wonder if PA will eventually just give in and start taxing food as well.
  • 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.

    • Re: (Score:3, Insightful)

      by Belial6 (794905)
      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.
  • Unfair Advantage? (Score:3, Interesting)

    by jgrabell (1695984) on Friday November 26, 2010 @10:08AM (#34349620) Homepage
    On the one hand, no sales tax, long waiting times, shipping fees and hassles. On the other hand, sales tax, immediate gratification, no shipping.
  • by brokeninside (34168) on Friday November 26, 2010 @10:12AM (#34349654)
    I was looking for a Firewire 400 to Firewire 800 cable. The salesman went into the back office to look up a product code, came back, and guided me to a rack with 4 pin to 6 pin Firewire 400 cables.

    So I left, went to a a computer, fired up the web browser, pointed it at Amazon, and found the cable I needed in about sixty seconds.

    When I'm shopping for books, I tend to have a similar experience. I'm always surprised when local shops have the titles that I want. But what is neat, though, is that with the Amazon Marketplace, nine times out of ten, I'm buying from a small bricks and mortar shop even though I'm purchasing from the 800 pound gorilla of e-merchants. Turns out that Amazon doesn't want to stock hardbound copies of Epictetus' Handbook or Farabi's Epistle on the Intellect. But their associates, small booksellers across the county that specialize in this or that, can do so and partner with Amazon to get national exposure.

    Which is to say, Amazon's "unfair" advantage with regard to sales tax is a red herring.
  • 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.

  • Provide a unified front against him, and you remove the weak points he's looking to use.

  • Look, maybe many Amazon customers don't pay sales taxes, but that's not the real problem here. Sales taxes are highly regressive (as in, poor people pay a much higher portion of their salary in sales tax than rich people). If you want justice for tax dodgers, you need to do three things: close the ridiculous corporate income tax loopholes, make our income tax structure more progressive, and raise capital gains taxes. Compared to that, sales taxes are small potatoes, and they're being paid by the wrong peopl
    • How about pursuing them across borders? The US has quite the military, and it'd reinforce the "nowhere to run, nowhere to hide" approach.

  • by Ichijo (607641) on Friday November 26, 2010 @10:56AM (#34349952) Homepage 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.

    • This is a brilliant solution! However, given what happened in Washington State recently, do you see this as a solution that can really implemented? The problem as I saw in the Washington state thing was that people saw it as just an increase in taxes, not a transfer. That and a lot of rich people spent a large amount of money to defeat it. I live in Tennessee and it seems that during elections there is noise every so often about instituting a state income tax, but it never gets anywhere.
  • Amazon and Amazon's employees pay property taxes for fire departments and police departments that protect their property.
    They pay fuel taxes for roads.
    They pay for hospitals with insurance premiums or direct payments for hospital services.
    They pay income taxes and sales taxes on their own purchases for national defense and courts and prisons and a few misc services.

    What else does Amazon need? Why don't they just buy it for cash when they need it instead of using a redistributionist tax scheme? Maybe they'

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

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

The test of intelligent tinkering is to save all the parts. -- Aldo Leopold

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