

An Open Letter to Jeff Bezos - smlacy
http://blog.parentsguild.com/2011/07/amazon-how-could-you-dump-us-an-open-letter-to-jeff-bezos/

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jwcacces
Have we forgotten that when we purchase things from out of state we still have
to pay taxes on them? It's just that the seller doesn't have to collect that
tax for our state when they don't have a physical presence here, but that
doesn't get us off the hook.

Now, I understand that no one really pays the tax, and that most states will
let you pay a flat fee to cover any taxes you might have owed (if they are
under a certain amount), but rest assured that if you make a massive (think
car, boat, or artwork) out of state purchase, they will be looking for that
tax money.

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jzila
The problem is that California redefined the definition of "physical presence"
to include affiliates. So not only would Amazon have to charge taxes on behalf
of affiliates, but just by having affiliates in California they'd have to
charge taxes for _any_ California purchases. That's what they cannot abide.

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calloc
The user named "X-Istence" here on Hacker News said it best[1]

"Because the user that is receiving the item is tax dodging Amazon should be
punished?"

[1] <http://news.ycombinator.com/item?id=2761847>

~~~
nostromo
And Amazon really won't really feel any pain. Only Californians are being hurt
by this in terms of lost jobs, lost income, and lost income tax revenue.

~~~
calloc
Just because Amazon is a large corporation doesn't mean it won't hurt them to
have to figure out the tax laws for all the different counties/cities/and
state level. Not only that, but why should Amazon be forced to file taxes in
50 states.

How does this ruling affect other much smaller companies? If I had an
affiliate program would I now have to start taking money according to
California tax law even-though I am located in Arizona?

~~~
nostromo
I don't think I made my point clear, I agree with you -- CA's actions don't
make sense.

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tzs
I have no philosophical objection to collecting tax for states other than the
one in which my employer is located, provided two things are done first:

1\. Rates are simplified. I do not want to deal with every separate county,
city, or special tax district that has its own rate. I want to be able to look
up the rate I should charge based on just a 5 digit zip code.

2\. Reporting is simplified. I do not want to deal with almost 50 different
requirements for how to submit the collected taxes. Keep in mind that each
state needs to know how much tax was collected in each tax district so that
they can apportion it correctly, so at the very least they are going to want
some kind of breakdown from me.

My suggestion to deal with #1 would be for the states to get together and
create a single source for rate data, updated quarterly, so that merchants
could grab all the rate data from one place.

For #2, my suggestion would be for the states to agree to collect for each
other. I'm in Washington, so already have to collect tax for Washington sales,
and am already set up to report the appropriate data to Washington. So why not
make it so when I report to Washington, I report sales from all states?
Washington can them break that out by state and send the appropriate money and
distribution information to the other states. Same goes for the other states--
California merchants would report all sales and pay all collected taxes to
California, which would then pay Washington for the sales that were to
Washington, and so on.

If it were done this way, it would have minimal impact on merchants. We'd
basically just end up getting bigger tax tables than we now get, and
submitting more data to where we already submit data.

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eli
I realize this might not be a popular opinion, but Amazon is in the wrong
here. For years they have been exploiting a quirk of the way our taxes are
collected that allows them to avoid paying their fair share. [edit: that was
poorly phrased, but the point stands.]

If the people who live in CA have a problem with paying sales tax, they should
take that up with their legislators.

~~~
blake8086
What share of sales tax do you think Amazon is supposed to pay?

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fleitz
Zero. Sales tax is paid by the purchaser not the seller. In most states the
seller is required to collect the tax on behalf of the purchaser.

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rflrob
I can understand the argument that you don't want the complexities of dealing
with 50 different state taxes to burden the little guy, but what would stop
the US Congress from passing legislation that requires any company doing
inter-state business over $N to pay sales tax to the receiving state?

~~~
tzs
The complexity of dealing with 50 different state sales taxes isn't much of a
problem. It's the tens of thousands of county, city, and local sales taxes
that make it a problem.

~~~
throw_away
and as I've mentioned on earlier threads, then you have to add another
dimension of _which_ things are taxable and which are exempt.

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wccrawford
"Petty"? California is double-dipping on the taxes. Why should Amazon stand
for that when it's obviously unfair?

~~~
eli
In what way are they double-dipping? When you buy things in CA you're supposed
to pay sales tax.

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nhebb
The core issue for me is that placing a sales tax on affiliate clicks is
illogical. Lets say a Californian has a website with Amazon affiliate links. I
live in Oregon, which has no sales tax. I click one of the affiliate links and
buy from Amazon, a Washington based company. Why should the sales tax go to
the State of California? The sale wasn't made between a vendor or a customer
located there. The affiliate earns a commission, which the State of California
can charge an income tax on.

~~~
198d
I think you're slightly off here. As I understand it, what these states are
trying to do is consider Amazon's independent affiliates a physical presence
for Amazon in that state. What that means is that Amazon then becomes
responsible for collecting sales tax on items purchased by residents of that
state; how they found their way to Amazon and made their purchase isn't
relevant. In your example, no sales tax would need to be collected because
you're a resident of Oregon and, presumably, Amazon does not have a physical
presence there.

~~~
DanLivesHere
This is true, but what the states are trying to do is patent nonsense.

True: "[W]hat these states are trying to do is consider Amazon's independent
affiliates a physical presence for Amazon in that state."

Also true: "[H]ow [a customer] found their way to Amazon and made their
purchase isn't relevant."

The problem: The two statements are directly at odds with each other.

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scythe
Might be easier to charge the sales tax only on people who clicked the
affiliate links. Trying to tax the people who didn't sounds unfair,
considering _Quill Corporation v. North Dakota_.

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RyanMcGreal
"Error establishing a database connection"

Does anyone have a cached version of the letter?

~~~
bartmcpherson
[http://webcache.googleusercontent.com/search?q=cache:http://...](http://webcache.googleusercontent.com/search?q=cache:http://blog.parentsguild.com/2011/07/amazon-
how-could-you-dump-us-an-open-letter-to-jeff-
bezos/&hl=en&client=firefox-a&hs=APk&rls=org.mozilla:en-US:official&strip=1)

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fleitz
"The thing is, Jeff, that we are Californians. Paying taxes to our state
benefits us and our family. If we didn’t have you, we would shop more at local
retailers that DO pay taxes in California and DO reinvest in our local area.
The more successful you are, the less our money stays in the area and the
fewer funds we have for our local infrastructure."

If Amazon is detrimental to CA residents than as a CA resident why would they
put Amazon affiliate links on their site in the first place? Aren't they
helping Amazon to be successful? The argument seems inconsistent. They seem to
only have adopted this view only after being kicked off the program, if they
were still on I'm sure we'd see no open letter regarding not collecting CA
sales tax.

Also, if a CA resident buys something from Amazon and doesn't pay CA sales tax
doesn't the sales tax money remain with the consumer which means there is no
difference for money staying in the community and being available for
community investment. What I mean by this is if a CA resident buys a TV from
Amazon and saves $200 because they evaded tax, then the person still has $200
to go buy coffee from a local retailer.

~~~
andreaPG
flietz, nice points but a bit facetious. Of course I only wrote the post
because CA's law and Amazon's response directly affect our site. I might have
thought it but not taken the time to write it if it wasn't so personal.

Amazon is a net good, I think. It's made products from anywhere available to
anywhere readily, reliably and cheaply. It also had created a wonderful
ecosystem for small businesses. This is why we chose to affiliate our site
with Amazon.

That said, there's no question that Amazon's success further decimated /
continues to decimate small independent booksellers and other retailers who
contributed more readily to regional economies - creating local jobs,
supporting local events, paying local sales tax, etc.

Your local consumer may have more money for local coffee if she doesn't pay
sales tax, but her local government has less. Beyond that, her local economy
has less from any profit on the TV going into circulation in Washington State
rather than staying with a locally-owned business.

That said, I value Amazon's right to compete with local businesses, and the
value and innovation their success brings to me, my city, our nation, and the
world at large.

Whether or not you agree with sales tax is one question - the one addressed by
your points above. But if it exists for some, how is it fair for it not to
exist for all?

(The argument that the consumer is expected to pay it either way is not a
valid point - the reality is the consumer is escaping it with one retailer and
coughing it up at another.)

~~~
fleitz
I'm not a lawyer, but would incorporating an S-corp in another state not solve
your issues with Amazon and the CA law?

~~~
jpadkins
I don't think she is trying to avoid the taxes and stay in business. I think
she wants CA to receive the taxes and have local retailers on a level playing
field.

